Despite misgivings, many economists are starting to agree that some sort of bailout is essential

[mmonk]

As the Bush administration warns of dire consequences without the bailout, some accuse it of fear-mongering to gin up support for the plan. Still, many economists have bought the prognosis, even while arguing over the appropriate prescription, concluding that some form of intervention is required to dispel the fear paralyzing the financial system.

-snip-

While the debate goes on in Washington, in many corporate offices, in company cafeterias, and around dining room tables, the financial lockdown is impinging on plans.

-snip-

"Loans are basically frozen due to the credit crisis," said Vicki Sanger, who is now leaning on personal credit cards bearing double-digit interest rates to finance building roads and sidewalks for a residential real estate development in Fruita, Colo. "The banks just are not lending."

-snip-

With the economy already suffering the strains of plunging housing prices, growing joblessness and the new-found austerity of debt-saturated consumers, many experts fear the unraveling of the financial system could pin the nation in distress for years.

http://www.newsobserver.com/nation_world/story/1232848.html

[mmonk]

1. Here is a check list people need to watch:

1. Real (Frankfurt: BJU.F - news) estate values -- must stabilize or edge higher

2. The rate of existing and new home sales -- must rebound

3. Credit conditions -- must ease up substantially

4. Crude oil prices -- must continue to decline, and then stabilize

How are things tracking now?

1. Real estate values: encouraging

2. The rate of existing and new home sales: less encouraging

3. Credit conditions: discouraging

4. Crude oil prices: encouraging

http://uk.biz.yahoo.com/080926/244/i7hz0.html

[sinkingfeeling]

2. I want data for this. Where's the evidence that 'loans are basically frozen due to the credit

crisis'? Can't be all loans since I just did a signature loan with my credit union last week.

Maybe banks aren't lending for 'a residential real estate development in Fruita, Colo. because it's a bad risk. How many other residential developments are currently being built there? How are home sales? Does Fruita, CO need more housing?

[mmonk]

3. Maybe this helps explain the strain.

http://money.cnn.com/2008/09/26/markets/bondcenter/treasury_prices/index.htm?section=money_latest

[sinkingfeeling]

4. I still don't see a need to rush right in and rescue investment banks.

"With loads of troubled assets on their balance sheets, banks are hesitant to take on more loans if the risk of default is high." - seems like the sensible thing to do.

"With the only potential buyer debating whether or not to make the deal, financial institutions continued to invest in less risky assets like government bonds."

There's a real difference between a 'slowdown or strain' and a 'crisis'.

[mmonk]

5. An example.

Washington Mutual is not an investment bank.