THE CREDIT CRISIS COLD WAR: BANKS VS CONSUMER-THE COLLAPSE OF A CORE RELATIONSHIP- PART ONE: THE CONSEQUENCE TO THE REAL ECONOMY. Economic Downturns are not uncommon in a free market economy, and the United States in the post war era have experienced downturns and economic stagnation that threaten to permanently damage our system. Previous recessions were followed by a statistical and realized recovery. Our current situation differs because this recession was a result of the credit collapse that involved a factor of trust. Removing other variables, the factor of trust was a primary component to our previous recoveries because banks had confidence in the consumer, and the consumer had faith in the banking system. Since the Great Depression, the core belief in our system allowed the consumer and banks to conduct business with continued faith in each other, and the foundation for recovery was a given in the past due to this shared confidence. Banks would respond to the central banks … [Read more...]