Random Hot Post – How Fucked Up is This?

I am stunned and amazed at the perfidy of the financial institutions and the governments - as usual. If anyone in their right mind does not understand the reasons behind the current economic crisis - I will explain it in simple terms:

It came about by financial institutions lending money they did not have to people who could not afford to pay the loans back. This in turn caused massive increases in the "value" of real estate and the stock market. None of which was sustainable when the time came to repay the money. Simple really. The US and UK governments encouraged this process. It is a little more complex than that, but this is the crux of the matter.

So, to fix the problem of money that does not exist being lent to people that cannot afford to pay it back, the US government has decided to lend some more money that does not exist to GMAC, the financial institution responsible for providing money for poor people to buy General Motors cars that they cannot afford. GMAC has decided to lend this money out at 0% interest. But - there is a problem. There is not enough people with a credit rating good enough to be stupid enough to put their next three years wages into a crappy GM truck.

So, GMAC have decided to lower the credit rating that people need to be able to get a loan. They have now lowered the required credit rating to 621. The median score for Americans is 723. So, now they are going to lend money to people with credit scores well below the National average.

They are also a little miffed at the rule that states they must actually have the money (or at least some of it) before they lend it out. Which presents them with a little problem. Even after a $6 billion loan from the Treasury Department, they simply do not have the assets. They have since applied to have the rules changed to enable them to use non-cash assets instead. You know, like the twenty million dollar office building that is now worth two million.....

Even more entertainingly, it turns out that the $6 billion the Treasury Department commited to GMAC also does not exist, because they had already promised the $350 billion they had available.

So, you have the financial crisis being fixed by The Treasury lending money they do not have to GMAC to lend money they do not have to people with poor credit ratings to buy crappy GM trucks they don't want.

Any one see where this is going? I pity Mr Obama trying to sort this clusterfuck out.

The real question is - are people stupid enough to allow themselves to be persuaded to dig a deeper financial hole than they are already in?

And bearing in mind, that when the money does have to be repaid, it will eventually come out of the taxpayers pocket, so if they do decide to dig the hole deeper, they are going to be lending money to themselves that they have almost no hope of earning in the future because inflation wil have devalued it so much........ Ah capitalism