Chapter 18 2. A Financial System That Destroys Confidence

In the past, banks had great confidence in you. If you lend money to you, you will pay back the money, and then the bank can make some money. So it not only lends money to ordinary people for consumption, but also lends money to companies as short-term financing, and then companies pay salaries through short-term financing. , to buy raw materials, works very well.It is lent to ordinary people for credit card borrowing or consumer loans, and ordinary people use it for meals, for buying appliances, and for buying cars.Because the bank is very willing to lend you money, because you will pay it back.If other banks are short of money, they are also willing to lend money to other banks for short-term loans.

Therefore, the entire financial lending market in the United States was so active in the past. Banks lent money to companies, consumers, and other banks.That's no problem.But readers please pay attention.When the "melamine incident" of subprime loans happened, the banks thought about it.Do I still have to lend to businesses?What if that guy doesn't pay back?It's like we have no confidence in milk.you can imagine.When you were having lunch today, you used to drink milk tea. Maybe you dare not drink milk tea at noon today. You drink lemon tea. Although it is all tea, you dare not add milk. It is not easy to live at this age , Why bother with yourself, drink melamine or something.

Americans are the same, banks lend money to consumers.It is also thinking, should I lend it to you?What if you don't pay back?It doesn't want to lend to the bank, so what if the bank goes bankrupt?Moreover, there have been many bank failures recently. As of mid-November 2008, as many as 147 US banks were on the verge of bankruptcy.Therefore, banks dare not lend money out, neither to lend to enterprises for short-term financing, nor to lend to consumers for credit card loans or consumer loans, nor to lend to banks, and simply keep everything in their hands. According to a piece of data I got, American banks did not lend a dime to real estate developers in October.According to estimates, half of American real estate developers should go bankrupt because the capital chain is broken.Come November, you find that things are getting worse.Not lending to realtors is an October thing.But in November, especially in the second half of the year, everyone found that although companies can survive with a little short-term financing they have finally obtained, they can continue to pay salaries and continue to buy materials; banks can also use inter-bank short-term loans to barely survive However, the problem of consumers has arisen. Banks do not want to lend to consumers because of insufficient funds and other reasons, and banks are afraid that consumers will not pay back the money.