tag:blogger.com,1999:blog-4608495014098655630.post412803642081301405..comments2008-11-25T08:47:30.696-08:00Fred's Tech Bloghttp://www.blogger.com/profile/14411400305259489621noreply@blogger.comBlogger1125tag:blogger.com,1999:blog-4608495014098655630.post-84919589887677023752008-11-25T08:47:00.000-08:002008-11-25T08:47:00.000-08:00This is reminiscent of Japan's recession in the early 1990's. They tried infusing cash into banks in the hopes that increased lending would add some velocity to the market. What they didn't realize is that lending was not supply-limited but demand-limited: because of diminished confidence, people and companies were stockpiling yen and wanted to reduce, rather than expand, their debts.<BR/><BR/>The Japanese came up with a great phrase to describe this scenario: "pushing on a string."<BR/><BR/>I'm curious whether Paulson's strategy will have the same effect. Consumer confidence is at an all-time low (for entirely valid reasons) - sending people more credit card applications may not affect their interest in increasing their consumer (and high-interest) debt...David Steinhttp://www.djstein.comnoreply@blogger.com