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Tuesday, December 30, 2008

More Evidence economists are overly optimistic

"The Conference Board's Consumer Confidence Index fell to 38 in December from a revised 44.7 in November. Economists surveyed by Thomson Reuters had expected the index to rise incrementally to 45."

... Expect this sort of news item to continue for the next few months until some economists realize how completely out of touch they are.

Tuesday, December 23, 2008

Surprise, economists are wrong

"The figures were worse than economists had forecast..."

What's the hottest market now that housing has collapsed? Betting against classically bent economists that keep seeing rays of sunshine in a darkened room.

I don't want to suggest we are doomed to years of recession, but I do think the econ profession has this nasty tendency, likely due to their love of perfectly adjusting markets, for being overly optimistic.

Monday, December 22, 2008

Excessive Wages - A Reality

Traditional economists look at large compensation packages paid to 'important' CEOs and the like and they point to the high stress, amount of innovation and education, and high personal risk and time necessary to maintain such a position as justification for wages paid. After all, it is the 'free' market that is deciding these wages, right? Not really.

The 'free' market is subject to cultural norms - norms that allow executives to not only want but to expect high pay or their work - regardless of how hard they work at their jobs. They expect to fly corporate jets and to pay for lavish parties with company money. It's a perk, not a necessity for them to take or keep the job.

Take Goldman Sachs:
"Lloyd Blankfein, president and chief executive of Goldman Sachs, took home nearly $54 million in compensation last year. The company's top five executives received a total of $242 million."

I gotta tell you, $50 million a year is a lot of money - for anyone. But being CEO of a major financial firm is pretty cool by itself. Most people that are attracted to such positions are type A personalities and are only driven by money as an initial motivator. Their main motivation is to stay busy and the work itself. They live to work - that's why they got to the level they obtained as corporate executive. So, would they take $40 million, $30 million, etc. for the same job...most assuredly. Again, the bulk of that money is just an expected perk since that's how it has been done across the industry for decades. Basically, corporate executives have collective bargaining power over their industry (financial) simply due to the norms of the industry itself.

And therein lies the problem for the free market - and one that requires government regulatory solutions: An individual company would be foolish to pay lower than X amount since, due to market forces, as long as another company would pay X amount, the first company would be unable to attract quality CEOs ("quality" is debatable in light of recent events). This is a game theory problem. The only way to break the habit of excessive pay is if a third party jumps in and limits the pay across the board such that the playing field isn't skewed to favor one firm or another.

And therein lies the problem for the government: it is almost impossible to maintain a level playing field. For example, the TARP funds right now are being distributed basically by whomever the Fed decides is worthy of the funds. This kind of government involvement is largely subjective. The solution could end up being worse than the problem. The upside is Obama has chosen to surround himself with intelligencia - let's hope it's the right kind. Whatever that means.

Thursday, December 18, 2008

Ponzi Schemes and Hyman Minsky

Nice post by Mike. But I would like to add that Ponzi schemes were one highlight of heterodox economist Hyman Minsky's Financial Instability Hypothesis - a good degree of which has (and is) proven to shed the greatest amount of light on our current predicament.

Who knows how many other Ponzi schemes went on un-noticed during the era of free and easy money....

Finally Some Regulated Justice

Thanks to the Fed:

"In seeking to address concerns expressed by policymakers and consumers, the Fed has severely restricted or prohibited card issuers from engaging in certain practices such as 'universal default,' 'double-cycle billing,' and raising interest rates on existing balances. The basic principles contained in many legislative proposals are reflected in these regulations.

Saturday, December 13, 2008

Zimbabwe and, is there such a thing as ethical assasination?

Here's the latest Zimbabwe craziness.

I typically don't support assasination, and it appears many other don't either. But the case of Zimbabwe is problematic. Take one person's comment:

" I would support the trial of Robert Mugabe, and a free and fair election...."

The problem is that neither is possible in a country as corrupt as Zimbabwe. Mugabe and his thugs are killing thousands and will continue to do so. The rest of the world is in the grips of recession and isn't focused on the Zimbabwe issue. What hopes do these starving and dying people have?

Friday, December 5, 2008

Biden's Economic Adviser

He picks Jared Bernstein of EPI.

Bernstein, if not outright, definitely has some heterodox leanings. He is not of the textbook classical econ mold that treats free trade as some holy grail. He has written hundred of articles and publications regarding income distribution issues (equity and fairness) - focusing not just on "efficiency" gains of trade and work.

I think he's an excellent pick.

Monday, December 1, 2008

Indiana's (Overly?)Optimistic Economist

Michael Hicks (and or his fellow Ball State economists), economist at Ball State University in Muncie, IN and director of its Center of Business and Economic Research, predicted the "US likely went into recession... late third quarter."

Unfathomably, the IBJ quotes him as actually saying:
"Very few people will actually lose their jobs."
This quote single-handedly says a couple things about him:
1. He is insensitive

2. He apparently has been reading some alternate universe labor report. The report I read from the Bureau of Labor Statistics shows the number of unemployed people in the last 12 months has risen by more than 2.7 million

To be fair, the article was poorly written, and it weaved in and out about Indiana recession and US recession so it's unclear when Mr. Hicks was talking about which entity: Indiana or the US.

Nevertheless, NBER just today announced that we've REALLY been in recession since December 2007.


Saturday, November 22, 2008

Why I Love Obama

Because he also gets it.
I hoped for a new "New Deal." And he delivers.

Friday, November 21, 2008

Can't Wait Until Monday

It's amazing what a little confidence and reduced uncertainty can do.

"'s Al Olson reports that immediately after NBC News' report on Tim Geithner likely to be named Treasury Secretary, stocks rebounded sharply. The Dow Jones Industrial Average was trading in negative territory -- down about 38 points -- before the news. Moments after, the Dow zoomed more than 300 points." (MSNBC source)

I support the pick overall.

Geithner seems to get that traditional Fed policy will not solve this crisis:

"What we were observing in U.S. and global financial markets was similar to the classic pattern in financial crises. Asset price declines—triggered by concern about the outlook for economic performance—led to a reduction in the willingness to bear risk and to margin calls. Borrowers needed to sell assets to meet the calls; some highly leveraged firms were unable to meet their obligations and their counterparties responded by liquidating the collateral they held. This put downward pressure on asset prices and increased price volatility. Dealers raised margins further to compensate for heightened volatility and reduced liquidity. This, in turn, put more pressure on other leveraged investors. A self-reinforcing downward spiral of higher haircuts forced sales, lower prices, higher volatility and still lower prices.

This dynamic poses a number of risks to the functioning of the financial system. It reduces the effectiveness of monetary policy, as the widening in spreads and risk premia worked to offset part of the reduction in the fed funds rate. Contagion spreads, transmitting waves of distress to other markets, from subprime to prime mortgages and even to agency mortgage-backed securities, to commercial mortgage-backed securities and to corporate bonds and loans. In the current situation, effects were felt in the municipal and student loan markets."

-Senate Banking Committee Remarks, T. Geithner

Thursday, November 20, 2008

Mainstream economists just don't GET it

Mankiw is finally pointing out that the Fed pumping money into the economy isn't working. Duh. Been there, discussed that.

The sad thing is, he still doesn't get WHY. As is typical of his more classical perspective, he is focusing on inflation expectations being the culprit. It's not the big problem. It is true that with little wiggle room in nominal rates, and with prices falling and expected to fall further, that real rates should rise - which is problematic for the Fed (ie. there is a nominal liquidity trap, which people have been noting for months now will be a problem).

But that's just one small part of the problem. The BIG problem is the overall market uncertainty and consumer confidence drop. Banks, business, people are hoarding their money, reducing credit usage etc and pulling funds from their 401K's and stock market etc. All this means money demand is rocketing up - raising interest rates. And it's not just general market uncertainty, but also INFLATION uncertainty. Yes, deflation is likely in the short-run, but keep in mind that just a few months ago we were all concerned about stagflation. To the extent that is a longer-term concern, inflation uncertainty is higher now. This contributes to hoarding or lack of lending and borrowing --- people are taking a wait-and-see approach.

So, the Fed can announce a price target all they want, but the Fed only has so much control. They can't control inflation uncertainty due to supply-side effects, nor can they control general market uncertainty in times where aggregate demand is free-falling. Further, to the degree that the Fed can't control the money supply in times of crisis (ie. money is endogenous and led by demand for funds), this further limits the Fed's ability to effect the market. I am therefore skeptical that even an announced price target would have much of an effect given the current malaise.

As a matter of fact, Mankiw's very prescription would likely cause inflation uncertainty to skyrocket as X number of people would find the Fed action credible, Y number would not, and Z number would see the current economic crisis making it moot! That could mean an even bigger credit crunch!

Focus needs to be on 2 areas:

1. Quicker use of that $700 billion to buy equity in banks etc to get interbank funds flowing and to try to reduce uncertainty (which is the main culprit).

2. Government spending stimulus of a large-order - a new New Deal.

....Abandon Fed Funds targeting - it's not effective and actually can be doing more harm than good because if interest rates on riskier savings is unaffected by the Fed such that those rates keep rising due to uncertainty, but the Fed keeps trying to push it's interest rate on T-bills down further, all that does is INCREASE demand for hoarding.

I think monetary theory will be completely revamped after this crisis is over with, because I am becoming more and more convinced that the traditional idea that decreasing Fed Funds rate can stimulate the economy is outdated in times like these --- in normal times yes, but not now.


...just absolutely disgusting.
2 months can't come fast enough.

Wednesday, November 19, 2008


President of Chrysler:

"[As a condition of loan] We fully welcome the government as stakeholder, including as an equity holder [part owner]."

Wow I live in an interesting and scary time. I still don't get it though. If the problem is still largely liquidity and consumer's not buying autos in large part due to lack of financing, why don't we just take $25 billion or $50 billion and provide tax rebates to purchasers of automobiles with relatively high MPG. That helps consumers, helps the environment, helps automakers (from Japan or the USA or wherever).... It is true the effect on stimulating demand, dollar-per-dollar, would be less than government spending or a loan provided directly to US automakers, but it would still be substantial, and frankly seems a little easier pill to swallow.

Tuesday, November 18, 2008

Show Me the Money

"A second stimulus package should 'emphasize investment in infrastructure,' such as roads, bridges and other construction, as well as alternative energy projects"

I couldn't agree more. I'd extend that 'infrastructure' to retooling existing non-green infrastructure into green infrastructure such as providing:

1. direct financial assistance to State's with business plans for mass transit. This would help 2 issues: some State's financial problems and their need for revamped transportation options

2. government subsidization/investment in alternative fuel stations and productive capacity along the lines of Obama's energy plan to support a plethora of alternative energies

That along with general spending on regular infrastructure is a good second stimulus I would support.

I would note that this should NOT be the only spending regarding Obama's overall environmental strategy. The long-run strategy should include research and oversight and strategizing on exactly what kinds of green initiatives make the most sense for the US to pursue. It's always best to have a plan first, then start putting money where it matters.

UAW admission of self-defeat

I am watching the House Finance Services Committee, and just now the UAW President, speaking on behalf of the Detroit bailout, said something to the effect of:

"I made a promise to our union workers that they wouldn't have to pay for their health care.... it was the hardest decision I've had to make to change that to help out auto companies."

Hmmm. I wonder why Detroit is having such a hard time....
I'm all for more socialized healthcare, but only if it's done correctly. GM etc. are not government agencies - they are far more subject to negative turn in the economy and don't have access to a printing press. So by putting the entire cost of retiree health care etc. on their backs was never smart for automakers or UAW employees in the long-run. Union power got out of control in many parts of the Midwest thanks to UAW. Changes came too late. And now automakers, the UAW, and employees are paying the price in part because automakers refused to follow Honda, Toyota etc. and not let the Union walk all over them.

Monday, November 17, 2008

Words From a Strange Source

Prof. Richard Posner, who typically take a pretty laissez-faire attitude toward policy questions du jour (though perhaps less so than his co-blogger Gary Becker) had this to say on their most recent posts regarding the potential auto bailout:

"The major problems with allowing the automakers to be forced into bankruptcy within the next few months are three, all arising from the depression that the nation appears to be rapidly sinking into."

The bolding is my own, but to hear someone like Posner all but say that he thinks we are heading for a depression, and that we need to bail out the auto industry, is a bit striking. I do think he's in the minority on that point.

Friday, November 14, 2008

OOPS, Intrade forgot about Nebraska's split electoral vote

Tonight, Obama won 1 extra electoral vote, from Nebraska, which other than Maine, is the only state to split its electoral votes. So, intrade was off slightly in terms of total final electoral tally.

As an aside, does it not seem somehow....unpatriotic that we extend State's rights to NATIONAL elections? Why should Nebraska be able to decide to split its electoral votes, while others choose not to. We need serious federal overhaul of our electoral system. I would start by, you know, getting rid of it.

Thursday, November 13, 2008

Mixed Messages

Our government's reaction, especially as of late, to the credit crisis leaves much to be desired. It reminds me of John McCain's failed presidential campaign: a whole lot of tactic, but no clear strategy. First we were going to just buy up bad debt, then we were going to take equity ownership of banks to inject cash, now we are ditching the bad debt buy-up and we are talking about bailing out GM and Chrysler, and now we are talking about government-backed restructuring of mortgages....

From a heterodox econ perspective, this surely doesn't help ease market volatility and uncertainty. Consumers value direction - and fear breeds off of confusion, and our government is not providing direction, but they are definitely adding confusion.

We need to pick a strategy and stick to it at this point, or risk an even worse outcome.

Further, as an aside, I do not support the bailing out of GM and Chrysler. Stabilizing the financial markets was one thing, but once you start bailing out specific manufacturing sectors, where does the slippery slope flatten out? Detroit screwed up in terms of having bad business plans for decades, and letting Union power tilt the balance too far from cost-effectiveness. We owe Detroit no further favors from what we've given them for years. One can make an argument that Chrysler for example is 'too big to fail' especially in light of the supply chain and the negative ripple effect that could ensue. I don't buy that. I envision Toyota, Nissan, Honda etc. picking up the slack with a limited time lag. I think it's worth the risk to let some in Detroit fail. It's not like bankrupt companies just disappear, their assets will still exist to be bought out, or restructured under new or even the same (potentially) ownership, etc.

Friday, November 7, 2008

An Update on Zimbabwe Hyperinflation

As Hyperinflation gets more and more out of control in that country as the two opposing political factions can't (won't in the case of Mugabe) move forward with a governing agreement, the deviation of estimates regarding exactly what that country's inflation rate is has, well, inflated:

Is it 231,000,000%

or could it be 2,790,000,000,000,000,000%

The reports are 3 weeks apart. 3 weeks is a lifetime regarding hyperinflation.

Of course, this is an example of statistical vs. economic significance. Regardless of the actual statistic, the economic situation likely wouldn't be much different: it's in the crapper in any case.

Wednesday, November 5, 2008

Prediction markets Predict Perfectly

It appears that when North Carolina and Missouri are finally officially called, McCain will have won Missouri, and Obama North Carolina. This will mean the final electoral tally will by 364 for Obama and 174 for McCain, if I'm not mistaken.
This will mean further that will have exactly predicted - for days prior - the outcome of the US election. On caveat: predicted Obama would win Missouri and McCain would win Indiana - it appears likely the opposite has occurred. But they both have 11 electoral votes so the net effect is predicted perfectly.

"On the eve of the 2008 U.S. presidential election, Barack Obama and John McCain are making final arguments to voters in key swing states. Intrade's presidential markets show Obama extending his advantage even as polls show a slight tightening."

Barack Obama (364 Votes) (top)

John McCain (174 Votes) (bottom)

Florida (27)



Pennsylvania (21)



Ohio (20)



Georgia (15)



North Carolina (15)



Virginia (13)



Missouri (11)



Indiana (11)



Nevada (5)



New Mexico (5)



North Dakota (3)



Montana (3)



Friday, October 31, 2008

Infrastructure Spending vs. Tax Rebates

With all due respect to Mankiw's "Let States decide" what kind of stimulus they get (which seems to me would be a political nightmare for numerous Governors, many of which may be new to office by the time the stimulus passes), there is good reason to favor direct spending such as via infrastructure a la a "New" New Deal as opposed to further tax rebates.

Firstly, there is significant evidence that consumers and firms are saving good chunks of their income due to the uncertainty of the market. In so far as that money is hoarded or used to pay off bad or old debt, then a rebate will do little to stimulate new investment and consumption. In so far that it is thrust into the financial sector via the purchase of bonds or stock etc., there is good chance that the money would be 'tied up' with the rest of the money that banks refuse to lend. It is true that lending is loosening, but it is still a problem.

No, the only way to guarantee an actual stimulus in this climate is through direct spending. Cut out the financial intermediaries and eliminate the potential for leakages and directly pump money into new investment projects - investment projects that sadly have been crowded out over the course of a number of decades due to the massive expense for the sake of "national defense" (or offense, as the case may be).

McCain's "Spending Freeze"

Not so much.

Wednesday, October 29, 2008

Another step closer to a liquidity trap - for nothing

Today the Fed acted to cut the Fed Funds rate to 1%. As I've expressed in the past, at best, this will likely be ineffectual.

I agree with economist Bernard Baumohl who said:

"The latest Fed move is not going to hasten the economic recovery by a single day or accelerate the cleansing of bank balance sheets, what is needed more than anything else at this stage is simply patience."

I agree with him that the problem lies not with the cost of obtaining a loan (the demand side), but with the inability / unwillingness of banks to lend (the supply side) in this time of great debt and uncertainty.

Thursday, October 23, 2008

A Sign of the Times

...and the shift in economic priorities - one that maybe occurs once in a generation.

Wednesday, October 15, 2008

Tuesday, October 14, 2008

Warnings from the Ignored Father of Macroeconomics

Some people, including economists are bemoaning the fact that the warnings about our 'excessive' economy were not heeded. They point to recent predictions made by Roubini and others years ago. But these warnings extend not just from 6 months prior, or 2 years ago - they go all the way back to an all-but-pushed-aside economist (nowadays at least): John Maynard Keynes, from Chapter 12 of his "General Theory":

"Of the maxims of orthodox finance none, surely, is more anti-social than the fetish of liquidity, the doctrine that it is a positive virtue on the part of investment institutions to concentrate their resources upon the holding of “liquid” securities. It forgets that there is no such thing as liquidity of investment for the community as a whole. The social object of skilled investment should be to defeat the dark forces of time and ignorance which envelop our future. The actual, private object of the most skilled investment to-day is “to beat the gun”, as the Americans so well express it, to outwit the crowd, and to pass the bad, or depreciating, half-crown to the other fellow.... As the organisation of investment markets improves, the risk of the predominance of speculation does, however, increase.... Speculators may do no harm as bubbles on a steady stream of enterprise. But the position is serious when enterprise becomes the bubble on a whirlpool of speculation. When the capital development of a country becomes a by-product of the activities of a casino, the job is likely to be ill-done.... These tendencies are a scarcely avoidable outcome of our having successfully organised “liquid” investment markets."

Here's to hoping his warnings are never forgotten (or ignored) again.

Saturday, October 11, 2008

"We are All Minskyans now": Support of Partial Nationalization of Financial Markets

The Fed Chair and Treasury Secretary and a number of rich nations have all agreed yesterday on a course of action which would essentially, at least partially, nationalize the banking / financial system worldwide.

I support this measure as an unfortunate necessity of our times. I've come to the conclusion after much thinking and much observation that the only way the government can attempt to end this crisis is to reduce the massive uncertainty in our banking and financial institutions. Having only one or two major / rich nations do this would be problematic as it would facilitate the flow of financial capital out of those troubled countries that failed to nationalize and toward those that did. No, to be beneficial globally, it has to be a global agreement. And it looks like that is what it will be.

Just throwing money at banks is more harmful than good as I mention in previous posts - again to reiterate, reduced interest is beneficial for those that want to consume or invest or borrow money for further lending (banks), but is hardly beneficial to banks and financial intermediaries that want to borrow when the banks they want to lend from have no incentive to do so, and that is where the real problem is. The problem isn't on the borrowing side of the equation, it's on the lending side.

By buying stock in failing banks etc., we assure other banks and customers etc. that that institution has the backing, support, and partial ownership by the government. This expectation alone immediately boosts the banks credit worthiness and reduces the uncertainty that if I as a bank lend to that institution, it could very likely fail. The idea is that interbank lending will eventually increase back to normal, and eventually the money will end up on main street where it belongs.

In order for this to work, massive amounts of stock will have to be bought. 700 Billion will not be enough to stop the global crisis. The entire system has to be normalized, and that will require a lot of nationalization.

Will this mean the end of capitalist financial markets? Not entirely, but it will mean the end of next-to-no-holds-bars financial markets. it will mean a true oversight by big government, and by the Central banks of the world. It will mean Hyman Minsky's predictions will have come true.

It's the end of an era. And the beginning of a new one.

Friday, October 10, 2008

Indiana Goes Obama

Indiana is now in the blue for the first time ever over at

Panic is the Incorrect Term

'A panic is a "situation in which people do things that contradict rationality," says Paolo Pasquariello, a professor at the University of Michigan's Ross School of Business.'

I disagree. There is nothing irrational about taking your money out of stocks and financial instruments in general in a situation of intense market uncertainty. The argument that the "real" economy isn't that bad, so why make such rash decisions is ridiculous given the fact that the "real" economy, more and more since the financial credit explosion of the 1970s to today, is the financial sector. IE, the financial sector is inextricably linked to the traditional real economy.

People aren't in a "panic." They are worried. They see rising uncertainty and a financial sector in shambles. Panic implies people making impulsive decisions when things aren't that bad. Economists and pundits should take a lesson from history. The last time we had a major "financially caused" recession was the Great Depression. Most all the recent past recessions have been due to bubbles in physical assets (which is what this started out as but got infinitely worse because of the securitization of those assets - which is a financial problem), shocks to input prices, etc. I don't personally think this will likely be a depression, but this will be one hell of a recession - there's nothing irrational about preparing for it.

Finally an Austrian post I can (partly) Agree With

Thorsten Polliet makes the solid case, that I agree with that, at a minimum, the Fed's rate cuts will do nothing to ease the current crisis conditions. Effectively there is a coordination failure in the credit money system that has created a vertical "wall" of money supply, whereby no reduction in r can stimulate the transfer of that money to those that need it. IE, no matter the money demand for investment spending, the supply can't get there.

And I think Thorsten is correct that this could be a net negative effect in that the lower interest rates mean that those that can obtain financing are urged to make ever riskier decisions regarding what to do with their cheaply lent money. Low-interest rates are bubble creating.

I disagree with his assessment that it is all the government's fault, or that somehow fiat money is the core trouble-maker. Government was a contributor certainly, but markets themselves need to take a hard look in the mirror.

Thursday, October 9, 2008

Present / Future Credit Mix under Financial Uncertainty and Endogenous Money

So, I have been working my brain trying to conceptualize how credit and financial mis-coordination can be integrated with Keynes' liquidity preference and post-Keynesian concepts of credit and money endogeneity.

This where I'm at so far. It may make no sense at all... but I guess everyone with an econ background should be at least trying to figure out what's going on! The first picture is my basic setup, the second is an example of potential dangerous attempted monetary expansion under conditions of endogeneity, liquidity preference and credit, and high levels of uncertainty whereby credit money suppliers / savers are unwilling / unable to lend for present spending

Wednesday, October 8, 2008

More evidence that debt from credit is at heart of crisis

Minsky theory predicts this.

People have negative borrowing-on-credit growth for the first time in a LONG time. This means people are taking more of their money and putting it against their debt - especially given that revolving credit card debt growth is negative. This is exactly what we would expect. So the Fed can pump all the money it wants into the economy. New spending will not happen until consumers and investors pay for the debt created by their past consumption and investment. When people pay this debt it goes right back to the banks --- where the money is tied up in the first place!

To quote post-Keynesian structuralism (like a crystal ball....):

Furthermore, Goodhart (1993) suggests that with the growth of wholesale

money markets and liability management, the distinction between situations of

illiquidity and conditions of insolvency has been erased in such a way that the

central bank’s role as lender of last resort involves a serious risk of loss. He also

warns that, in today’s more competitive conditions, a central bank would find it

increasingly hard to persuade banks to join in and share the burden of potential

loss from the rescue of an insolvent bank. He concludes, ‘this could lead to

serious problem for central banks. They may not have sufficient funds of their

own … to accept the potential losses involved in a future rescue exercise’

(Goodhart, 1993, p. 421). Here, the expression of liquidity preference for the

central bank operates through the amount of funds made available to banks. For

the central bank, the decision to place funds with the ‘risk-insolvent’ bank

involves the creation of new debts (i.e. change in the size of its portfolio). When

liquidity preference rises, the central bank is less willing to face a potentially

large insolvency problem, and there is no alternative but the partial or total

intervention of the government.

Credit-money is endogenous folks. The Fed can set the rate, but it's ultimately up to people and banks whether or not to lend. And reducing interest rates is not the way to do it - not when there are so many outstanding debts and in the midst of economic malaise.