"Joseph A. Petrucelli is one of the most cautious bankers in America. In fact, Petrucelli is so cautious that the Federal Deposit Insurance Corp. recently criticized his bank for not lending enough. The FDICs negative review of East Bridgewater Savings Banks loan volume is an anomaly in todays current banking scene as lenders reel from their role in offering too many cruddy mortgage products to borrowers with weak credit.

Bad or delinquent loans? Zero.

Foreclosures? None.

Money set aside in 2008 for anticipated loan losses? Nothing.

Were paranoid about credit quality, Petrucelli said. The 62-year-old chief executive has run the bank since 1992.

Still, the FDIC slapped East Bridgewater Savings with a rare needs to improve rating after evaluating the bank under the Community Reinvestment Act. FDIC examiners also faulted East Bridgewater for not advertising and marketing its loan products enough."

I keep hearing about how the US Government is trying to get banks to lend more money.How is creating more debt going to solve our financial problems if having to much debt was what created the problem in the first place. I have also read that the deposit insurance for all banks went up. So once again good banks have to help bail out the bad ones.Talking about moral hazard. Why are the bad banks being kept alive by bailouts. I thought creative destruction was a key underpinning of capitalism.

Email Scott, he has some real things to say about spiraling downward from the gold standard to the silver standard to the paper trail and how it's ineventable that our system would finally fail.

Bandages upon bandages can only last so long. Loaning more money to business will indeed loosen up the cash flow but there's that bandage again.

How is creating more debt going to solve our financial problems if having to much debt was what created the problem in the first place.

There are differnt kinds of debt, just like there are different kinds of food. Just because food is what makes someone fat and unhealthy doesn't mean that they should quit eating. Good, healthy, reasonable debt is a very necessary part of our economy. Think about it this way....if there was no credit, how many Americans could own their own homes? The average wage-earner spends most of his working life paying for the home that he lives in, which he could never have had without credit. But if the guy buys more house than he can ever pay for, that's bad.

The key is reasonableness. Mortgage brokers and realtors helped people buy houses that they shouldn't have bought in the first place, and banks were dumb enough to take on these poisonous loans. Banks need to get back in the business of making loans to the credit-worthy, not stop giving credit altogether.

Brent:

Well-put. A capitalist system would not function properly without debt.

It's the re-finance-to-the-max-and-then-make-interest-only-payments-or-less-mortgages and things like that which caused a big chunk of the present problem.

They are creating some debt, but mostly they are monetizing debt already created. By that I mean it is mathematically impossible to actually pay off a credit based system because all "money" is created from borrowing. Since borrowing is the principle the only money floating around to pay it back with is the principle. The only way to come up with money to pay the interest is to theoretically monetize bankrupted debt, until the monetized debt equals the interest, and hence the need for bankruptcy disappears.




What they are (monetizing debt, and issuing stimulus money made out of thin air) doing must be done if the US dollar and hence the whole world economy is to survive.

Once the American people loose confidence in their paper we are on a very slippery slope. The bottom of that slope cannot even be seen at this juncture.

Actual money is nearly a thing of the past and the rest is our confidence in the paper. Fred said it correctly in other terms.

Credit with money itself is the dependance upon the future and that's slippery enough. But depending upon our paper as money for the future is incredibly slippery. Especially so is this so when we have lost our morality in the matters of money.

Confidence is fast slipping away. What we must determine is this; what are Americans losing confidence in, is it our government and financial institutions along with their C.E.O.'s or is it in our money system. My opinion is that we still believe in our paper.

Doug, properly understood, the spiritual man will discern the utter folly of hoping for a gold based economy, it simply cannot happen in the long term, but only when a system falls and the legals return to martial law. This is because the New Testament, is our time, and that time declares that the people of God live in the land of promise, not the land of law. Our money is actually promise or "notes". Just as we are saved by believing in promises in the bible, so we are sustained in our physical lives by believing in the value of promises. The problem in humanity is they are all bankrupt and unable to pay their way, and must resort to promises?!

For this reason, I do not look for a gold standard again, but perhaps a gold redemption based on certificates, but totally will be smoke and mirrors. To return to Gold is like turning the power of the government back to the people, and will never happen without utter bankruptcy, because the machinery of government will have to grind to a halt.

Fred; I am totally in agreement with you concerning the gold standard or the one of silver for that matter.
I am not suggesting that we can return to these standards.

What I am saying is this; those in the greater control who understand our money system and how it works from the ground up, do not and cannot actually believe in it.

As long as the worker bees believe in our system of money; with enough bandages wisely applied it will surive.

Morality and fidality toward a thing is being lost when the confidence toward it goes. That has occurred in high places.

The idea of a thing being built upon a simple promise actually seeks it's own demise finally. Faith was almost gone when Jesus finally came as the promise from the Father, but not quite. He came in the fullness of (exact) time. parenthesis mine

We indeed are in the land of promise as New Covenant believers [I am glad you brought that up] but we have already received the earnest of our hope and therefore we are inexcused if we lose our belief and hope of a fuller coming of the principle of our salvation! He, Christ has placed Himself at the disadvantage here.

There is a vast difference between a simple promise and a promise where the interest is paid before the promise has manifested. The banks have the huge advantage over the people in this matter in the matter of secular faith. In our system the interest is paid before the principle is paid, for most part.

"The idea of a thing being built upon a simple promise actually seeks it's own demise finally"

I am not sure why you would assume that the promise is "simple". The promise is base on trust and that trust should be based on vetting the business model of the business that one is dealing with. The "creative destruction" aspect of the capitalist system will allow bad business models to fail and poor ones to fail. the problem for decades has been government interference in the market place, especially in the monetary part.
As far as the Gold Standard is concerned; I would give a successful grain farmer more credit for his bin full of grain then somebody with access to "gold". The farmer can leverage his documented success as a farmer, thereby contributing to the success of others in his community. Efficient business models are responsible for the unprecedented wealth that the world has experience in the last thirty years.

Trust is a good thing but not good enough unless one is dealing with good and moral people.

Any monitary system must be backed by gold, silver, copper, diamonds, or golden wheat for example. There must be an actual form of national wealth behind currency or finally the moral issue of broken trust destroys the promisary note system.

A dollar or a pound or a yuro represents a certain increment of labor and the wealth that that labor produced at some point in history or the whole monitary thing finally depends upon morals and promises which in an imperfect world is simply not good enough. We're speaking of the plight of humanity in light of the stability of the economey. When we leave the basic thing that money really is behind us, we ask for trouble.

So what would gold buy you if everyone was out to defraud everyone else. Give me a transaction with someone who understands that if he keeps his word he will prosper. All you need is a legal system and a society that appreciates productivity.
Consider the Golden era of Islam; Mohammad began his religious career by being a caravan raider. As his empire grew the act of raiding and plundering became a part of Islams holy script. All the plundered gold from the Roman and Persian Empires did not created a culture equal to that of the Romans or Persians.
Some shiny metal does not give you the standard of living that you enjoy today; it is innovation and productivity. So why not put your trust in the things that really put "food on your table". And if you can trust that why not use this trust as collateral to increase the pace of innovation and productivity.

The"Barn Yard Politics?"


new twist to the little Red Hen......... ......... ..

THE LITTLE RED HEN!
Simply stated...... ..Who will help me Plant My Wheat?
'Not I,' said the cow.
'Not I,' said the duck.
'Not I,' said the pig.
'Not I,' said the goose.
'Then I will do it by myself,' said the little red hen, and so she did.

The wheat grew very tall and ripened into golden grain.

'Who will help me reap my wheat?' asked the little red hen.

'Not I,' said the duck..
'Out of my classification, ' said the pig.
'I'd lose my seniority,' said the cow.
'I'd lose my unemployment compensation, ' said the goose.

'Then I will do it by myself,' said the little red hen, and so she did.

At last it came time to bake the bread.

'Who will help me bake the bread?' asked the little red hen.
'That would be overtime for me,' said the cow.
'I'd lose my welfare benefits,' said the duck.
'I'm a dropout and never learned how,' said the pig.
'If I'm to be the only helper, that's discrimination, ' said the goose.

'Then I will do it by myself,' said the little red hen.
She baked five loaves and held them up for all of her neighbors to see.

They wanted some and, in fact, demanded a share.
But the little red hen said, 'No, I shall eat all five loaves.'

'Excess profits!' cried the cow. (Nancy Pelosi)
'Capitalist leech!' screamed the duck. (Barbara Boxer)
'I demand equal rights!' yelled the goose. (Jesse Jackson )
The pig just grunted in disdain. (Ted Kennedy)

And they all painted 'Unfair!' picket signs and marched around and around
the little red hen, shouting obscenities.

Then the farmer (Obama) came. He said to the little red hen, 'You must not be so greedy.'

'But I earned the bread,' said the little red hen.

'Exactly,' said Barack the farmer. 'That is what makes our free enterprise system so wonderful.
Anyone in the barnyard can earn as much as he wants.
But under our modern government regulations, the productive workers must divide the fruits of their labor
with those who are lazy and idle.'

And they all lived happily ever after, including the little red hen,
who smiled and clucked, 'I am grateful, for now I truly understand.'

But her neighbors became quite disappointed in her.
She never again baked bread because she joined the 'party' and got her bread free.
And all the Democrats smiled. 'Fairness' had been established.
Individual initiative had died, but nobody noticed; perhaps no one cared...
so long as there was free bread that 'the rich' were paying for.

EPILOGUE:

Bill Clinton is getting $12 million for his memoirs.
Hillary got $8 million for hers.

That's $20 million for the memories from two people, who for eight years,
repeatedly testified, under oath, that they couldn't remember anything.

IS THIS A GREAT BARNYARD OR WHAT ?


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http://www.nypost.com/seven/03222009/postopinion/opedcolumnists/so_sayeth_the_teleprompter_160695.htm

Cupcake, I loved the Little Red Hen story, did you make the changes or find it somewhere? If a person wants to get the straight scoop on our econmic wreck, google Marc Faber, Jim Rogers and Peter Schiff, you'll get the non-sugared version of what is going on.

Can't take the credit, BrentR.... I am too covered up in puke and poop lately to have any writing inspiration. If you want to feel real fear, think 5 kids with norovirus.