http://www.crikey.com.au/2008/11/28/private-credit-eases-rate-cut-firms/ now with extra source Sat, 11 Feb 2012 13:13:23 +0000 hourly 1 http://wordpress.org/?v=3.2.1 http://www.crikey.com.au/2008/11/28/private-credit-eases-rate-cut-firms/#comment-12553 Andrew Thu, 01 Jan 1970 10:00:00 +0000 #comment-12553 This is symptomatic management of a chronic disease which will still kill the patient. To what end are we cutting interest rates? To give people money to spend on exactly the things - mortgages, shares, imported goodies - which caused the credit market to seize up in the first place. Is there anyone who believes that we can give enough money to the banks that they will be able to lend sustainably to the insolvent? So this really just gets us back to where we are now - which is in economic palliative care. Unless there is a redirection of this money to more effective expenditure than typified most of the credit bubble, its just good money after bad. When interest rates are zero (or about 3.0%) we will have to face real options. This is symptomatic management of a chronic disease which will still kill the patient. To what end are we cutting interest rates? To give people money to spend on exactly the things - mortgages, shares, imported goodies - which caused the credit market to seize up in the first place. Is there anyone who believes that we can give enough money to the banks that they will be able to lend sustainably to the insolvent? So this really just gets us back to where we are now - which is in economic palliative care. Unless there is a redirection of this money to more effective expenditure than typified most of the credit bubble, its just good money after bad. When interest rates are zero (or about 3.0%) we will have to face real options.

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