Monday, September 13, 2010
The Movement of Debt Grinds to a Halt
I went to the art show Saturday evening and talked with several people I have known from Clifton having lived there so many years. I did not win any awards for either of my 2 paintings that were in the art show. It is, nevertheless, nice to have your work displayed so the public can see what you are doing. My art work, my political satire art work, is not going to create much interest in Cincinnati. However, I will continue to do it as the mood moves me. I have tried other subjects and will continue to try new ones, but until I am moved to do something vastly different, I will continue to paint those ideas I like.
The election season is upon us and I really have nothing new to write about. I have had my say about what I thought would go a long way towards moving the domestic economy forward. Credit is very basic to our economy and the securitization of individual credit is a tool that can move the economy forward. Unfortunately, that tool was abused and the necessary repairs have not taken place to make that tool (securitization) a viable tool again.
The credit rating agencies play a essential role in the movement of credit, and the job they did during the recent housing bubble and financial disaster have left this tool (securitization) disabled. Those with influence that could have demanded the repair of the credit rating agencies have not stood up for reform. As a result, housing will continue to be a drag on the economy rather than stimulus. Eventually, Wall Street will figure this out and repairs to the system will then be made. After watching and listening to the politicians speak about our domestic economy, it is clear that they do not understand enough about the creation of credit, its movement from the borrow to the ultimate investor. There is plenty of cash in the hands of large pools of investible funds, such as public pension funds, but without confidence in the quality of the securitization of household debt, the movement of debt from borrow to investor grinds to a halt.