Capital Growth
is...growth.
Just put itin the bank and let it grow, then lend it or from it. In the
long and short of it, the same people will still leverage assets
Were the USA to adopt that policy, we might be 25or 50 years recovering
what we will do in 15 months if the stabilization bill's funds are
applied.
In themostconservativeofAsian societies, post-war Taiwan & SouthKorea,
had compelled savings-- like the USA did in war-time (really strong
inducements for Americans with taxes & bond drives).
However,reconstruction pans in those countries as in their counterpart
socialist world restricted private option to coordination with state
planning.
Despite the American business safety net, we are a materially
unregimented uncentralized economy. That provides innovation &
resilience, and is the reason for sober optimism about the bad debt
asset relief. America will respond - the financial markets debt will
not break the economy with that extended relief.
Debt asset was referenced -- not an oxymoron -- but an asset with
earnings - until the debtor repayment fails Those failures in mixed
bundles - waried buyers & holders of US mortgage bonds. Insuring them
and paying the creditors insurance claims , or adjusting the assets used
for leverage by discounted or failed bonds curtails, shrinks credit.
Replacing it sustains business and personal undertakings; so that
commerce and consumption can proceed forward.
Recession is no happy lesson, and no sane parties punish by it. Even
the criminal and the communist world have no autarkic oasis in severe
economic downtown.
Capital is made by surplus over costs--profit; and by the instaneity of
a promise in credit - solong as sound andcapable of returning the lent
amount with its true costs for use (interest).
Governmentmakes capital -- via taxdeposits in reserved non-spending
accounts, through profitable royalties on anythng itowns (usually
natural resources in our nation); and by bonds-notes, bills, and bonds.
A US government indebtedness is close to gold - when honestlybacked
andissued. (The Freddie Mac & Fannie Mae corporatios watered thecredit
of the USA with bundled variable rate sub-prime mortgages ---as if they
were ordinary debts of corporations.
Disclosures of those securities risks lessened their value -- they and
kindred private sector secondary mortgages were heavliy discounted ...
many failed with interests rate hikes & employment losses. Demands for
sounder assets, and claims against bond and other securities insurers
flooded the markets with dollar asset dumps - stock liquidations -
Which then combined with many hedge funds & money-market funds hedged
against loss computer programs; which then drove them selves down in a
selling spiral. Other ordinary traders and people panicked and so
more, and then ran for their banks. Great investment banks folded --
like sailers capsizing in a blow.
Few could stay liquid without borrowing; and every borrowing cost
more--because of the amount borrowed, the risk, the desperate
competition for available credit, and reduced asset bases
Pass the Economic Stabilization Bill quickly -- and reverse the backward
resonance of a bad dump.
More tomorrow -- on import substitution - like the Pickens Plan for
energy. Without foregoing cross-trade -- that which we produce here
- makes incomes and capital here also.
That 'capital' - even whenitisn't for tomorrow's consumers rent & food
&clothing - in a safe insured bank account -- just isn't going to grow
enough or quckly enough. We're spending the $700 billion on ourselves
by the wa; butitdoes relieve an international dollar credit crunch and
helps sustain the double blue chip of the safer American economy and
theplaces whereyou buy shares in it.