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August 19, 2007
Credit Crunch
by Tina Grazier
Recent problems in the financial area have folks feeling a bit jittery. The thing that really bugs me is that we never seem to find out exactly what has happened. Some entity gets a lot of scrutiny in the press and a few people are blamed for the trouble and then we’re on to the next crunch or crisis. That’s why a recent article in National Review, “Give Credit Where Credit is Due” was so refreshing. Jerry Bowyer tells us first where the problem is not and then goes on to challenge the president, an MBA, to bring the Fed and regulators to the table for some answers:
Between the borrower and the lender there stands a complex system of financial intermediaries. And right now there is a blockage somewhere in that system. The money is getting trapped, and the solution is to find that blockage and clear it. *** Here’s where the problem isn’t: household wealth. Right now, household wealth is the strongest it has been in this nation’s history. Corporate profits are as strong as ever, too. Business has plenty of cash on hand.
It’s also not a borrower problem. Mortgage applications are up, not down. Personal income is up, not down. Mortgage interest rates are still relatively low. Default rates are up slightly, but still quite small. *** It’s also not a sub-prime problem. You heard me right. The media has been obsessed with this theme, but even the media has to acknowledge that a 10,000 or 20,000 jump in the number of sub-prime foreclosures cannot possibly be responsible for the current credit crunch. *** I suspect that when we find what’s blocking the credit hose, we’re also going to find a regulator standing on top of it. We need to find out for sure, though. And there’s only one person who can get all the right people in the same room at the same time.
I also really appreciate the fact that Mr. Bowyer doesn’t advocate bail outs or more regulation.
Economic reporting has been scant during the Bush years. In fact, the media has been nearly silent about the incredibly positive economic gains of the past few years. Silence speaks volumes, however, to those who bother to notice. Media silence reflects their knowledge of the administrations competence and strength…and of course they can’t report that! Now we are entering an election cycle; now even a hint of trouble can be prominently featured as a looming disaster. Yipee! Yes, we know the media; we know what they do. We will expect sensational stories and vow to stay awake and on our toes. We need to be armed with accurate information and a clear picture of our nation’s challenges and strengths so we can enter the voting booth with confidence and vote wisely. That won’t happen if we don’t demand a clear picture.
It’s important to acknowledge those who report in such a way as to hold the tootsies of our elected officials to the fire. So thank you, Jerry Bowyer, for calming the churned up waters and asking for answers on the current “credit crunch” from those with the power and knowledge to actually do something about it.
Posted by Post Scripts at August 19, 2007 09:40 PM