Comments on: Paul Krugman: After the Money’s Gone https://bartblog.bartcop.com/?p=1933 The Blog of BartCop.com Wed, 14 Nov 2012 04:36:18 +0000 hourly 1 http://wordpress.org/?v=3.9 By: Rainlander https://bartblog.bartcop.com/?p=1933&cpage=1#comment-7057 Sat, 15 Dec 2007 06:24:15 +0000 http://bartblog.bartcop.com/2007/12/14/paul-krugman-after-the-moneys-gone/#comment-7057 Suppose that there’s a nasty rumor about the First Bank of Pottersville: people say that the bank made a huge loan to the president’s brother-in-law, who squandered the money on a failed business venture.

Flashback to 1987 at the silverado S&L where
the Bush brothers made unsecured loans to itself
and in retrospect of Prescott Bush’s Nazi warcrimes tribunals paid back pennies on the dollar in fines, The silverado fines amounted to about the same dollar figure as the nuremburg ruling but in the case of silverado the cot to taxpayers was estimated around one billion.

]]> By: grimgold https://bartblog.bartcop.com/?p=1933&cpage=1#comment-7046 Fri, 14 Dec 2007 16:48:36 +0000 http://bartblog.bartcop.com/2007/12/14/paul-krugman-after-the-moneys-gone/#comment-7046 One of the major factors in this loan crisis is that people have taken loans with a variable interest rate. Adjustable rate loans enable lenders to allow for inflation.
Now, with the danger of inflation, banks have begun raising their rates, causing monthly mortgage payments to go up.

People take the added risk of payments going up in the future, because fixed rate loans are higher. For example, a fixed rate loan might be at 5%. At the same time, the exact same loan, but adjustable – is at 4 3/4%, this allowing initially, for a smaller monthly payment. But when interest rates go up all hell breaks loose.
If there was no inflation, there would be no need for these adjustable rate loans!
The Fed can stop inflation, and therefore this nonsense, any time it wants to. Please politic for, by law, a non-inflating dollar.
Grimgold

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