Why the recession is not gonna be over anytime soon

[Avinash_Tyagi]

TheRealMafoo said:

Slimebeast said:
Interesting thread indeed! I just scimmed thru the OP quickly and will dwelve deeper into it later, but need clarficcation on just one phrase thats unfamiliar to me:

What meaning has the word 'default' in this context?
(as in "allow excessive debt to be defaulted")

Defaulted means to just not pay the loan, and not to be obligated to ever play the loan.

So if a bank has 10 billion in debt, and the bank folds, the people that banked owed the money to just loses any option to get that money. It's just gone.

This would mean many banks would be folding (or filing chapter 11, having there debt wiped, and continuing), and it would cause some pain, but it's pain we need to go though before we are out of this.

What government is doing, is not letting those banks fail, and prolonging the problem.

From "History of the American Economy" 10 edition Hugh Rockoff & Gary Walton P.458 from the chapter on "The Great Depression":

The Federal reserve at this point, Most Economic historians agree, should have acted as  a Lender of Last resort.  It should have lent generously to the Bank of United Staes and other failing banks to break the cycle of fear that was undermining the banking system.  for a variety of reasons that we will discuss later in detail, however it did not do so.  To the Federal reserve it seemed that the banks that were failing were simply badly managed banks that should be eliminated to make the system more efficient.

They already tried your idea once Mafoo, it ddn't work then.