[Dan40]

A Synopsis of a Synopsis:

The collapse of the housing market AND the 'credit crunch' are the same problem.
It started over 30 years ago, backed at times by both Republicans and Democrats. ALL politicians share the guilt equally.
It sounded wonderful, "All Americans have the "RIGHT" to 'buy' their own home.
Not having a viable property, or a job, or a down payment, or a decent credit rating, or any prospect of making payments, were all major issues to the 'bankers.'
But small hurdles to the politicians.
So they passed laws requiring the 'bankers' to lend money, knowing it would NEVER be paid back.
'Bankers' found this slightly disagreeable and refused to throw money down the toilet. "Bankers' had the silly idea that only those that could prove they could pay a loan off should get a loan!!!
Government said, "You must!" Bankers said, "We Cannot!" "It is against the law." " Laws that you, the Government, use to regulate us!"
Government repeals those laws.
Bankers say, "What do we do with these worthless loans?" Government says, "Package them with good loans and sell them off."
Bankers said, "We Cannot!" "It is against the law." " Laws that you, the Government, use to regulate us!"
Government repeals those laws.

So the 'Slum Landlord' housing market. A separate market, not part of the actual housing market and well, well BELOW that market, joins the real housing market.
Value unknown as it has only been the slum market in the past. Rents were its value, not resale. But now slum landlords see a chance to inflate their properties by more than 10 times [maybe more than 20 times] and EXIT the market.
This causes the beginning of an insane inflation spiral from the bottom, bottom on up. And ALL caused by BAD, WORTHLESS, VALUELESS, loans, presently called 'subprime loans'
It takes 30 years of this disease and insanity to run out of speculators willing to buy these bundled "securities."
Bankers find themselves running out of money and no fools left to take their bad paper. Bankers go back to being 'bankers' Prove to us that you don't need the money and we will loan it to you! [Such 1970's thinking]
Gov. says, "Loan money!" Bankers says, "What money?" "We are broke!"

Now the Government throws Billions at the problem. The Bankers, BANK the money. They are done with the loans to the unloanable.
The cure I think is getting those worthless loans off the market. The Government willing to spend Trillions might become the replacement slum landlord and get its nose out of all other business. How that would work, I do not know.
But the "plans" so far have fixed nothing, and have changed by the hour.
Right now the PLAN is, 'we have no plan.

Dan