Tuesday, June 21, 2011

Talk about a double edged sword!

by Mike Flynn - Albany Realty Company - 229-883-6100


Here's the dilemma. Loose lending created a gigantic speculative bubble in the real estate markets. We are still mopping up the mess created when it burst.

When real estate values started dropping and construction projects stalled or got canceled, the rest of the economy fell in line and stalled too. If there is no construction industry, there is no need for asphalt plants, truss companies, brick manufacturing, sheet rock suppliers, the trucking companies that move the products, builder's risk policies..etc. We could go on but you get the idea of how infectious the stall became.

Now that the economy is again showing signs of stagnation, the banks are considering loosening up their lending standards. The country needs lending and credit. Banks make profits off of this process and the economy will stall without fluid credit. This has to happen despite the fear of blowing and bursting another bubble.

No comments:

Post a Comment