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On the other hand, how are sub-prime loans “sleazy” when a good-sized portion of the population would never get a loan without them? Do we really want to go back to requiring sterling credit and 20% down on all mortgages? If we do, there will be far fewer homes bought and sold in this country, and the economy will no doubt tank.

Exactly. Easier loans are good for the little guy (remember what made Jimmy Stewart a good guy in "It's a Wonderful Life"?). But somehow they become "sleazy" when... um... too many little guys can get them. Or something.

I don't even begin to understand the dynamic at play here. How did so many people on the left get to a place where their main refrain is that loans are "sleazy" and money should be tightened up so that the little guy has a harder time buying houses? One can only conclude that the left becomes angry if "too many" people have houses. Or... the wrong kind of people? Or what?

I don't know, but I do know there are some really ugly emotions at play here.

One can only conclude that the left becomes angry if "too many" people have houses. Or... the wrong kind of people? Or what?

Home owners tend to be more conservative than renters. Part of it might come from having to write checks to governments to pay for school taxes, sewer taxes, local govt taxes, etc

Here’s my take:

1) It’s a ‘buyer beware’ economy. That means you must read the fine print on anything that you buy. This includes mortgages.

2) Americans have been living beyond their means for a decade and a half, perhaps more. I agree with other posters that bailing out the little guy now will only encourage the bigger companies that offered these loans. The bigger companies and Wall St. all had golden parachutes and new exactly when to liquidate assets to retain exceedingly large profits.

3) Banks will have little choice but to take less risks for housing and that trinkles down into business banking. My bank had a letter of intent to fund up to 25% of my companies post-tax revenues. Now they have limited it to 15% causing a cash crunch to the business. I can blame all those greedy real-estate and oil speculators for the coming mammomth recession but truth is, it’s a free market and we all take the good with the bad. The bad is coming en masse, but the good will be at the end of 2008 when I buy such assets for pennies on the dollar. Does it make me feel funny I will be profiting off other people’s stupidity? NO! That is how free markets work, the smart folk with access to accurate information and a spreadsheet will always win economically.

Do I feel bad Joe, his wife and three kids will have to live in a dumpy two bedroom apartment when he had the 52’ plasma in the McMansion in 2006, driving the new BMW while I had a modest home and drove my used F-150 truck? NO! I do not feel bad.