More Bad Effects in the 6th District from Michele Bachmann

Commenter Anna notes:

I talked to a 6th district businessman yesterday who is unable to get a business loan (he banks at one of the zombie banks, and even though he's been a great customer for 12 years they are too scared to loan money). Folks, there are MANY zombie banks out there. FDIC closes a few banks (the worst of the bunch) every week, but many banks are paralyzed.

OK, so what has this got to do with Bachmann? Well, I'm wondering how cutting government spending (which leads to layoffs of many workers, and foreclosures on their homes) helps this situation. If more job losses (teachers, firefighters, etc) lead to more foreclosures and more banks losing more money . . . and then fewer loans to small businesses (which means no jobs created in the private sector), how do we stop the downward spiral?

I'm just trying to understand how this will work. All I see is that it will make the economy worse. A credit crunch exacerbates deflation . . . we need money going INTO the economy. The banks have to see their way clear to handing out loans . . . and that doesn't happen when government spending is cut (more jobs and contracts lost, businesses fail, more foreclosures . . . lower property values, more fear).

I want MB to explain how cutting government spending WON'T lead to economic decline. Explain to me how people won't lose jobs (government workers), how they won't need to foreclose on their homes, and how banks will then start lending again to small businesses. Until the banks can see a bottom they aren't going to move. The threat of cuts to government spending (the TEA party line) has them scared spitless . . . if government workers lose their jobs, and government contracts are cut then the banks are facing more problems, not fewer.

My .02. I want Bachmann to explain how she will prevent this disaster from happening.