Thursday, August 26, 2010

Why won't banks lend?

Because real opportunities are out there at two and three year investment periods. Banks can only guess what the Fed will do on a three month sample cycle. So, a proportion of their funds has to stay liquid to bet on alternative paths.

The Fed is out of sync, operating on a three month cycle when the economy has already slowed down. But is is not just the Fed, all sectors of the economy are just now getting into sync with the longer investment period.

1 comment:

Fernando Guzmán Cavero said...

The endless search of immoral financial profits per se, with out any contemplation to real people on the other side of the street. I mean the world's human beings in the 60th percentile, live with less 1 to 2 dollars a day. Is that the capitalist system , their fathers created? Of course the answer is , with out any doubts NO.
Who destroyed the saving institution if not the banking system and by extension the Financial System, creating charges to savings accounts as maintenance, fees for whatever concept they decide. Making the real banks pasive rate, the greatest business since the mid eighties today, this was an assault to private savings and to the economy as a whole. The consequences are obvious a system near the collapse by the irresponsible untheical behaviour of the real power: "Economic and Financial", in alliance with their servants: "The Polical Power".

Indeed, in a desperate situation they don't have where to make profits but through the manipulation of prices. The short term could destroy what some honest people defend a transparent and clean capitalysm.

Have you notice that one week they accumulate.and the following two or three weeks, begin the distribution of financial papers. When are tehy going to stop this orchestrated manipulation of markets

All is upside down , and, unless a serious reestructuring of "The Capitalist Phenomenon"that governs us. In my opinion we ended throwing our own race to the abyss.