The loans went to borrowers who might never before have been allowed to borrow. When they found repayment difficult, they were permitted to refinance their loans, generating fees for the lenders and postponing the ultimate reckoning. Then the credit markets turned and both the borrowers and lenders were in deep trouble.It has come to my attention that some people don't think we are in a crisis - certainly not one worth panicking over.
So it went with the subprime mortgage crisis. And so it is now going with corporate loans and bonds. It appears that defaults on leveraged loans and corporate bonds will soon rise to levels not seen since the Great Depression.
I think some panic is appropriate at this juncture.
If that does happen, a wave of corporate bankruptcies will deal another blow to the American economy, and present the Obama administration with more painful decisions about possible bailouts — bailouts that could be made directly or indirectly by persuading bailed-out banks to make loans that might not seem wise to the bankers.More bad loans! Brilliant!
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Read Nano-Plasm - you know you want to.
© 2005-2009 Stephen Clarke-Willson, Ph.D. - All Rights Reserved.
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