[lynn1120]

there is just "no Bid" which is not the same thing. In the case of the widget example:



"Let's recap. John buys a widget fo $10. The banks call it an asset and lend him $8 on it. Everyone is happy. Suddenly the widget market collapses and John's widgets are worth $1. The Banks call john and call in his loans. This is a liquidity issue for sure just as a sinking boat could be said to be taking on more ballast. In fact this is a solvency crisis. John has to go out of business or find a way to borrow money to pay his lenders until the widget market recovers. The market looks at Johns business model and says no way Jose."

first of all the bank itself is getting called on its borrowings, becaus ethere is "No Bid"-- that is the crux of the problem today -- john is a sign of the crisis spreading---throw a lot of crap at a big fan and you will be amazed at who gets hit...

If the Gov't - or someone with cash, can buy up the "no bid widget loans for say 20% or less, then that hair ball, which is currently preventing other doo- hickey markets from operating normally, will settle down.

Fact is there is still a demand for widgets, people are still servicing a larger % of the widget payments ( that % is currently unknown-- part of the problem) and will want more widgets in the future, the BUYER of today may well realize, over time, that even if as many as 60% of widget value is gone, (that = 60% of all widgets buyers have walked away), 40% have continued to paid off-- that is still a net (100%) gain for the widget loan buyer of today, would that not be good biz?

With the credit squeeze right now only Uncle Sam has the CASH, cause they can print it, to do this. Having "credit" is meaningless right now-- we have come to believe over the past 50 years that having credit is the same as having cash-- it is not, credit is not a right it is a privilage and that privilege is not being extended to any biz right now-- hence the need for the guy with the biggest pile of cash to pony up and remove this hair ball--
don't worry, the witch hunt for the execs and the loan officers etc will contine but that is bread and circuses shell game for the masses compared to the credit crunch issue.

JMHO