Ouch

I ran across the following excerpt at the Jerome Levy Forecasting Center at Bard College:

"Lending is not going to be fixed by recapitalizing banks. The underlying problem is not just that aggregate private loans are too large relative to bank capital; it is that they are too large relative to aggregate private income. Thus, the problem is with the borrowers, not just the lenders, and households need to lower their debt relative to income while corporations need to lower their debt relative to revenue. . . "

If the giant brains at the JLFC are correct, then we are looking at a much longer term problem that cannot be fixed by government alone.

This is further proof of what I have been saying for the last several weeks: “that the market and the economy are very different and separate things”.