4 ms·

I'd agree with your first paragraph and disagree with your 2nd one with the exception of the tech bubble -- it's been really, really hard for normal businesses

by jbooth 11y ago

I'd agree with your first paragraph and disagree with your 2nd one with the exception of the tech bubble -- it's been really, really hard for normal businesses to get bank loans even when competing with 0.1% interest rates from the fed. My theory is that the administration wanted more stimulus, couldn't make it happen politically in useful ways (infrastructure projects, school building, new nuke plants etc), so the only outlet they had was QE, which did the job somewhat (we're not in a great depression), but did have the negative effects you highlighted. I think we'd be better off had the money been spent on infrastructure projects -- same sugar rush preventing a crash, plus we get a bunch of stuff afterwards. Right now we just have paper assets in the aftermath.

_yosefk 11y ago
Just the tech bubble?.. I dunno. I'm not that good at these things, but fracking comes to mind, and subprime auto loans. "Couldn't make it happen politically?!" That part I don't get. You mean they couldn't just give everyone money so they spend it instead of giving money more or less directly to the richest people? You mean the citizens would revolt?! (Actually the possibility of QE on the scale we had in a bunch of democracies left me dumbfounded. Why do people put up with that shit?)
- jbooth 11y ago
  Fracking is new tech with a ridiculously short path to profitability, you pump the oil and you sell it. It's just good business to pump money into fracking (maybe bad environmentally, but that's beside the point). I wasn't aware of subprime auto loans, I'll have to look into that at some point. But the point about traditional business being really, really tight on credit even during QE still stands. Politically, citizens have nothing to do with it, look at Congress. They're voted in on fears of socialism and kenyans, not like they can turn around and support infrastructure spending.
  - _yosefk 11y ago
    Actually fracking doesn't look like a very good business as long as Saudi Arabia can extract oil from the ground at $6/barrel and thus lower the price of oil to a level where fracking does not pay off. I think a lot of these businesses therefore went belly up recently. But again this stuff is not my thing... so I could be wrong. Also - what do you mean "credit is tight for businesses"? Haven't businesses of all kinds been vigorously buying back their stocks lately, while issuing bonds at the same time? Those bonds having very low yields? Maybe grandma has a problem getting a loan from a bank to run her small shop (why would the bank lend out money when they get risk-free handouts from governments?.. AFAIK banks are actually notoriously bad at credit risk assessment when giving out loans to businesses so they tend to not bother); but definitely a public company issuing bonds has no problem of prohibitively high yields.

by jbooth 11y ago

_yosefk 11y ago

Just the tech bubble?.. I dunno. I'm not that good at these things, but fracking comes to mind, and subprime auto loans. "Couldn't make it happen politically?!" That part I don't get. You mean they couldn't just give everyone money so they spend it instead of giving money more or less directly to the richest people? You mean the citizens would revolt?! (Actually the possibility of QE on the scale we had in a bunch of democracies left me dumbfounded. Why do people put up with that shit?)

jbooth 11y ago
Fracking is new tech with a ridiculously short path to profitability, you pump the oil and you sell it. It's just good business to pump money into fracking (maybe bad environmentally, but that's beside the point). I wasn't aware of subprime auto loans, I'll have to look into that at some point. But the point about traditional business being really, really tight on credit even during QE still stands. Politically, citizens have nothing to do with it, look at Congress. They're voted in on fears of socialism and kenyans, not like they can turn around and support infrastructure spending.
- _yosefk 11y ago
  Actually fracking doesn't look like a very good business as long as Saudi Arabia can extract oil from the ground at $6/barrel and thus lower the price of oil to a level where fracking does not pay off. I think a lot of these businesses therefore went belly up recently. But again this stuff is not my thing... so I could be wrong. Also - what do you mean "credit is tight for businesses"? Haven't businesses of all kinds been vigorously buying back their stocks lately, while issuing bonds at the same time? Those bonds having very low yields? Maybe grandma has a problem getting a loan from a bank to run her small shop (why would the bank lend out money when they get risk-free handouts from governments?.. AFAIK banks are actually notoriously bad at credit risk assessment when giving out loans to businesses so they tend to not bother); but definitely a public company issuing bonds has no problem of prohibitively high yields.