Ka-ching! Stock Market vs. Credit Market
October 6, 2008 1 Comment
Near as I can tell, the “bailout,” “rescue,” or whatever, is about shoring up the “credit market.” Banks have to make loans, and they have to have money to make loans. Some pundits are saying that the stock market plunge we’ve been seeing, including the dramatic dive happening today, is not a measure of the prospects for this $700 billion rescue gamble. That’s because they’re splitting off what’s happening on Wall Street with the real problem that is all about credit.
I’m not convinced that the two are unrelated. I’m more inclined to think that the near-panic we’re seeing as people pull their money out of stocks means that people will be very slow to take out new loans, even with the bailout/rescue.
Who wants to borrow money in today’s climate? Time will tell.