Despite claims that the banking sector is safe and that TARP and the stimulus (which hasn’t kicked in) have saved the economy, Jeff Taylor writes from the former banking capital of the South about the impending mortgage bailout and lack of lending. Want to know what will keep the economy from growing and what kept the Japanese economy in a hole for ten years? Weak credit markets. Companies that use cash to pay down debt may be doing the right thing, but don’t have that cash available to make other investments. A thousand bank closures and an unwillingness to put money where the federal government is not a guarantor mean that the money being paid down is not going back out into the economy.
President Obama and Congressional Democrats say that health reform is needed to make for a permanent recovery. With Motley Fool asking whether Obamacare will kill capitalism, a greater likelihood is emerging that the president’s version of health reform (not to mention cap and tax, cash for clunkers, and other programs) is creating more uncertainty and slowing an economic recovery.
