Because they don't actually have the cash, says Paul Van Eeden in an excellent interview with BNN.
It's an interesting perspective - Van Eeden believes that the cash that banks to have is parked with the Fed with strings attached. So it's not really theirs to lend. And there is a great crisis of confidence in lending - folks who are looking for loans aren't desirable borrowers for banks, and folks who would be creditworthy are not out there looking for loans.
The interview is also worth watching because Van Eeden gives an excellent, clear explanation of how the government is mucking up any potential recovery with it's policies. His recommendation - let the market sort it out. How novel!
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