Money management I tell you!
CARRY ON.
T

I’ve enjoyed reading the back-n-forth. I too am trying to wrap my head around this whole thing. And I too have yet been able to get a clear picture as to the actual impending doom.

My wife & I have great credit and have in fact sold two homes and purchased a third within the last year or so with no issues whatsoever. And interestingly (also recently) I’ve witnessed two separate cases of a live radio show where the hosts (different individuals in different states) were actually soliciting small business owners experiencing credit issues to call in and explain their situations in detail.

And in both cases… there were little if any calls other than people who seemed able to find the money they needed.

And Tony… I have to agree with you. You borrow money. You pay back. Whether you’re a bank or an individual. If something goes wrong along the way, heads roll in one fashion or another.

It sure SEEMS simple.

But, like you Tony, I too am no expert. Just a scruffy, long-haired rocker dude who pays his bills and tries to make Dave Ramsey proud.

Seems like there’s an abundance of seemingly intelligent individuals occupying high-level positions in the financial industry who do well by adhering to Dave’s simple, logical and sound advice. Bad money management and dancing too much with the devil-of-credit works against both business and the individual.

CARRY ON.
T

As for the explanation you seek, and the article I posted, I’m always fascinated when people can read the same article and wind up with opposite reactions. I think the commercial paper problem sounds real, and really serious. To each his/her own I guess….

You posted:
“This is a systemic problem that reaches from the ratings agencies to the banks, to aggressive mortgage brokers, to consumers (whether gullible, greedy or otherwise) and back to the banks again.”

The line you draw still points to people screwing up all along the way.

CARRY ON.
T

When banks can’t borrow they can’t pay salaries? You’ve got to be kidding. Fire the people that do not perform well. My father -in- law was vice-pres. for a region of a banks, he was in Human Resources, a nice man that was upset each time he let someone go, but if they didn’t do their job…..
I won’t mention the banks but they are doing fine….

Banks lending to banks, lending to baks ….hmmmm interesting.

Thanks for the info Bill E.
I find it amusing that the article points out last year was worse than now…. and yet no panic, ‘politics/media’ anyone?
CARRY ON.
T

http://www.businessweek.com/bwdaily/dnflash/content/sep2008/db20080928_417591.htm

So, part of the problem as I understand it is as banks slowly realized (or in some cases admitted) the debt they had accrued due to their investments in questionable mortgage holdings that were rated highly (meaning they were considered safe investments) by the rating agencies in charge of those things when they should have been rated as risky investments, other banks stopped lending because they didn’t have faith that the bank borrowing wasn’t similarly exposed to these bad investments so they didn’t know if the bank could pay back the loan. When banks can’t borrow, they can’t pay their salaries and operating expenses. That then hits consumers as banks can no longer take risks on lending to anyone with anything lower than a perfect credit rating. I think that’s part of the story behind Wachovia. It’s not that Wachovia actually failed, instead their board decided to hedge their bets by selling the company before it failed because they realized that their exposure to these toxic debts was really high. A week later or so later, in fact, Wachovia announced a $23.9 billion loss for the third quarter. So, as I said, I’m no expert on these things, but this is the credit squeeze that I was talking about, and it has hit on a global scale.

I have little knowledge in this field so enlighten me, please.
Is there a problem with banks lending or is the problem consumers thinking they have to keep up w/the Joneses , SUV suburbanites , etc,,, and now they are in a hole… banks tightening who they lend to seems smart and fair to me. I understand that some in power positions allowed greed to corrupt their choices … but it seems so simple to me… fire the loser, and loan to those that have good credit or a viable business plan. If you take a chance on a business loan and lose …well… YOU LOSE. This goes for the bank … to the borrower.. my lawn needs mowed and I have allergies.
My credit is great so I am betting I’ll get any loan that I need.

I know this post seems cut and dried but because of my lack of knowledge in this field that is how I see it.
Willing to learn on this subject.

CARRY ON.
T

Can you elaborate on the lending between banks. I’d like to delve deeper into that part. Specifically the direct relation to the consumer credit industry.