"Fog a mirror, get a loan..." CalculatedRisk Nails It

CalculatedRisk nails the issue of why the current Treasury programs and proposals are designed to fail when it comes to the real estate market.  TARP, TALF, 4.5%, etc... they won't have the impact on the RE market that everyone is hoping for (Hope is not a strategy!).  Why?  Credit is not the issue.  Lending standards are.  Deleveraging is not occuring because of the rate levels.  It is occuring because we are withdrawing from an era of excessively loose lending without regard to repayment ability.

My favorite passage:

One of the tragedies of the housing bubble was that some people were enticed to buy a home before they were really ready to be homeowners, and others to extend themselves too far. Many of these people are now soured on the wonders of homeownership, and they will not be buyers for an extended period of time.

Amen, brother!  Interesting read here.

I have to give Meridith Whitney her due...

Apparently no one on Wall Street is willing to state the obvious because Meridith is making a big splash today talking about how credit to consumers will contract significantly as they start to enforce credit standards and restore sanity to the consumer lending situation.  (The horror!)

Why this is a surprise to anyone is beyond me.

Relevant quote:

"In other words, we expect available consumer liquidity in the form or credit-card lines to decline by 45 percent."