What Should be Done About the Continued Credit Crunch? How About Nothing?

by Florida's #1 Mortgage Planner on December 1, 2007

The economy runs in cycles and that is a healthy thing.  When the government Fed Rate Cut Rumor steps in to try and "fix" it, that is a bad thing as it prolongs the process.  Why doesn’t the government just let it go, stop screwing around with the economy trying to fix things and just let it run its course?

Politics is politics, but politicians need to stop trying to "look good" and focus on reality.  Of course, it isn’t just the politicians trying to fix things either.  What about Big Ben and the gang, making statements letting the market at least believe there is another rate cut coming?

Why can’t we just let things work through the cycle, so the cycle can complete itself and start moving in the opposite direction?

That’s right, it may get worse, but it always ends up getting better down the road, but only when the cycle has a chance to complete itself.  It is all part of a healthy economy.  Screwing with it only makes things worse, as we are seeing now.

  • Let the foreclosures happen and affordable housing will be a reality again.
  • Raise rates and recession (if the economy decides that’s what it needs) will happen, then be over and we will see an economic bounce later.  At least the dollar won’t continue its death spiral and we won’t continue to have stagflation (that’s when the economy slows, yet inflation increases).
  • Countrywide, Citigroup, whoever deserves to go under for their past mistakes, let them fail.  It is a necessary part of the solution.  Bail outs only cause more problems and prevents companies from learning from their mistakes.
  • Sellers need to lower prices to that which buyers are willing to pay, then the inventory will shrink and eventually the market will start moving higher again.

I could go on and on, but I think you get the point. 

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