The bailouts are to shore-up the banks against the avalanche of credit-card debt on the horizon. It would be ASININE to extend more credit to those unqualified.

People with good credit and low to no debt have no problem getting credit.

Welcome to slavery

Unless there are jobs that ACTUALLY pay for a descent living. Say no to the bankers perpetual enslavement agenta

I’ve said it before: either salaries must come up or widespread deflation must (continue to) occur. This is the hard reality our politicians do not want to face. Until something is done about those two main issues, our economy will continue to tank. I have no faith in the current administration to change anything, and I have to say that I don’t have much faith in Obama, either. He’s on a lot of corporate payrolls, as well.

Bluntly, I am not spending a nickel that I don’t have to.
Period!!!!

Right. . .

The average person on the street is completely leveraged just trying to pay for a living. Pay has, in no way, kept up with the cost of living. I make less now, in real dollars, than when I finished my advanced degree.

The problem with the average person is not credit; it’s *good* jobs. I’m not going to go out and buy anything if I expect my job to go offshore at any moment.

This is a demand problem, just like the Great Depression. Stimulating the supply is not going to increase the demand. You stimulate supply during stagflation, like in the early 1980’s, not during deflation.

Washington just doesn’t get it.

It is true that about 2/3rds of past consumer lending was being financed by packaging up loans and selling them ["securitization"]. It is also true that this funding source abruptly dried up in early October.

However, what you have to realize is that this funding was supporting the riskier portion of total consumer lending and that, with the pending recession almost officially declared (and looking to be fairly deep, too), it would be bad policy to continue making the same relatively poor quality loans. [Think about it -- if you were a banker and could decide which loans to sell and which to keep, you'd keep the better quality ones and sell the riskier ones, wouldn't you?]

Knowing that the hedge fund industry is/has/will apparently decline by trillions (we do not yet know the total size of the industry’s repayments to its clients for 12/31 — but the individual funds do and are acting to raise the cash needed), 200 billion isn’t enough to offset all of what they were funding.

Meanwhile, back at the bank, — since the banks are trying to reduce their overall loan exposure, what is likely to happen is that some loans the banks would have made anyway, or already have made, will be funded by this program instead.

So, I predict that the entire 200 billion a) won’t all go to new lending (some will be siphoned off for old loans by the banks), and b) won’t be big enough to replace all the funding that has disappeared.

Btw, the 600 billion earmarked for mortgages likely isn’t enough either. All it will do is replace the now disappeared funding for FNMA, GNMA, and FRE.

This has zero to do with making sound, safe loans.

A sound, safe mortgage loan in an environment where housing prices are falling is one with a very substantial cash down payment — or else a very cheap, relative to seller’s hopes, contract price.

My guess is that any house bought today for a price higher than what that house likely would have fetched in January 2002 will probably fall in value. Why January 2002? That is 1/2 way back to when homes were reasonably affordable [in 1996] compared to the incomes of the people who want to buy them.

In all too many areas of America, and especially in CA, Vegas, FL, and Phoneix, plus the special cases of the auto industry damaged areas of MI, OH, etc., prices of houses in “move in” condition are still far beyond what potential buyers can afford to pay.

That old 32% of income guideline was there for a reason.

Yes, I’ve worked in the financial industries concerned. Yes, I am and will continue to be a critic of their managers, especially their lending policies.

This is the root of the problem right here. The American consumer is tapped out and guess what, that’s 2/3rds of our economic engine. Take care of the consumer debt and the consumer will start buying again, simple as that.

This is a decade of predatory lending coming full circle. The financial sector has fleeced the flock and is now wondering why it’s all grinding to a halt.
With 3.6 trillion dollars that’s been thrown at this the government could have paid off everyone’s debt, which in turn would render those “toxic mortgages” valid, which would take them off the books of the financial institutions, which would give them the capital to loan again plus they would someone to loan too.
This scenario is probably not fair to everyone, and those who play by the rules will feel like they’ve just been screwed (which we have)but it will reset the game so to speak and give the next administration time to put some checks and balances in place so this doesn’t happen again.

Just a thought.

On the other hand, consumers have started to wise up about that other Bush doctrine: “when the going gets tough, the tough go shopping.”

Who ever actually voted for that bozo, anyway?

Americans who can be persuaded by the consequences of their actions are finally figuring out that debt’s a bad idea when you’re not making enough to support the debt you have already. That’s a good thing, in the long run, but it’s another headwind for lenders.

Mr. Obama better fix this quickly or his approval rating will be like Bushs’ in a hurry!

Think about this, where my newer house(2004) is built. I would assume that most of the mortgages there generate at least $600 each month of profit for the banks and with 50 houses thats $30,000 where is all that money going?

I think most banks are just like GM and all their bloated salary’s thats where the money is at!