http://finance.yahoo.com/loans/article/106603/Why-You-Can’t-Get-a-Loan
JohnThainsLimoDriver Wrote: ------------------------------------------------------- > Banks are just taking the money and reinvesting in > treasuries right now. The government blew it by > not mandating that they dole out the cash instead > of giving it right back to the govt. It’s part of > my short treasuries thesis that when banks regain > the confidence to lend they will sell their > treasury investments and drive rates back The problem however is the banks are the biggest buyers of government debt. The conundrum is that government is propping up the banks to protect bonholders.They know, if the banks go under, any bankruptcy court will slash and burn the bondholders, who incidentally, happen to be the biggest buyers of government debt. If you fcuk the bondholders of the banks, then you fcuk yourself, via wiping out the liquidity of the people who buy your Treasuries. Hope that made sense, I am drunk. The point here: the government is in an untenable position, trying to prop up these banks that are utterly and without a doubt insolvent.
HERE IS THE REASON! http://globaleconomicanalysis.blogspot.com/2009/02/fiat-world-mathematical-model.html
The second banks realize they can currently make a killing at these interest rates is the second they start to loan again. I think it’s already starting to happen.