This article some what inspired by original news article here: Small Banks, Tight Credit, Reliance on Souring Development Loans Is Leading To a Cash Crunch, Limiting Funds for Other Businesses
Over the last several months we've had some discussions on whether or not those that have faced foreclosure due to the housing, or more specifically, mortgage crisis should have gotten, or should get bailouts on the tax-payer's dime. Most people would say NO WAY, let 'em reap the results of their own stupidity and greed, but then the question becomes did they really know what they themselves (the ones saying let 'em rot) were saying and what impact they'd be having upon themselves?
If you haven't already checked out the linked article, do that please, then come back and think a bit on what I'm saying here -- that what we all have to be somewhat aware of is that we are all somewhat joined at the hip when it comes to matters of the economy. While I don't want to be my brother's keeper (seriously, literally, I don't want that job. My brother needs to take care of himself!) Not even figuratively really. Everyone should be taking care of themselves and I shouldn't be called upon to take care of others around me.
But... it's just not that easy. Look at these small banks and what is happening there. Don't think it impacts you? Maybe not, but maybe, just maybe (and probably likely) it does.
As credit starts tightening up for everyone, not just those that are bad credit risks, it means less money available for small business owners or wanna be small business owners. It means less money available for home improvement loans. Less money available for educational loans. Less money everywhere and for everything.
Sure you can probably still get money from GMAC or GE Money Bank or someone else that'll give you credit for some big purchase (like a car, or TV or similar item), you'll probably have to fork over for higher interest rates, bigger down payment requirements, or other things that take more of your savings or disposable income away from you.
I'm no fan of big government bailouts, but the thought was in my mind all along that watching tightening credit affect us all was not going to be pretty.
Would bailing out a bunch of home owners keep some of that tightened credit from negatively impacting many more of us? Maybe.
Would bailing out a bunch of home owners keep the banks that held these questionable loans from going under and taking other completely innocent individuals from losing money because of it? Again, maybe.
What say you all?
