“One big problem we have is that there was a lack of demand for debt. You dry up the market for debt instruments such as credit cards or loans fully visible, “said Scott Brown, chief economist at Raymond James & Associates in St. Petersburg, Florida.Nun I understand what it does not show us in this mess. People have too much debt, as it is not bad for a mortgage. If we did’nt have all these high interest debt, we have our mortgage payments. You should cut the interest to 5 or 6 percent, so people are paying that kind of thing. Crap! Why not see them!
The quote refers to credit default swaps. It means there is a lack of people willing to buy debt from debtors like visa or mastercard, or GMAC.
When they talk about demand for debt. They are speaking about investors buying securitized debt (mortgages and car loans) and unsecuritized debt (credit cards, etc.)
Investors aren’t buying mortgage debt because they feel that the US government can step in at anytime and change the values (principal and interest or Return On Investment ROI) of their investment. Everyone seems to forget that a mortgage has two sides. The person who promised to pay and the investor who lent them the money.
If I borrowed $ 100 from you and said I’ll give you $ 110 at the end of the week, you might do it if you thought I could repay. If some referee jumped in and said that I only had to pay you $ 90 in 3 months. How would you feel? Would you ever lend anyone $ 100 again if the referees came in and changed the rules on you. This is the point we are at. No one plays a game where the rules change in the middle of the game.
As for the unsecuritzed debt.. like credit cards… this debt is riskier and therefore garners a higher rate of interest. If you can’t afford the rate of interest, then you shouldn’t be buying the big screen TV’s and the $ 900 pocketbook.
Sorry, we need to move back to personal responsibility. No one forced anyone to take on all this high interest debt that you complained about. Nobody cared when people used their houses as ATM’s, now that there is no more cash in the machine they want the rules changed.
Suck it up…. No one is going to invest when the rules can be changed after the fact… no amount of bailout infussion into the system is going to change that. I don’t care what the jerks in Washington say, aint gonna happen.
It’s an Augean Stable of filth and corruption,,Tammanyism,Plutocrats,Cronyism,etc;