Raising money is becoming harder and harder.  Because of worthless derivatives and bravura leveraging, lenders won't lend money on the same terms as they did one year ago.  Many entities, individuals and companies, can't get the liquidity they need to run their lives and their businesses.  Banks are cutting back on small business credit lines.  

A year ago a person could get a student loan with a FICO score of 626.  Now the same score nets zero, according to today's Wall Street Journal:

Amorelle Henry, 25 has two semesters left to go of nursing school at the University of Northern Colorado in Greeley, Colo.

Leased, Last, Lost
By David Glenn Cox

Chrysler announced the other day that they would discontinue their automotive lease program. When I first heard this I assumed that it was to due to credit-related issues and Chrysler being under new management. Then I heard that Ford and GM are mulling over the same idea, and it has nothing to do with credit.

Recent diaries, such as this one have tackled the current foreclosure crisis.
This diary is an attempt to explain how we got where we are from the point of view of a former Fannie Mae employee. Today I will tackle a much-abbreviated version of the foreclosure crisis and the (possible) role of Fannie, Freddie and HUD in allowing it to happen. I tried to document as much as possible but couldn't find sources for some of the stuff I was told as a Fannie Mae employee.  If ANYONE has sources about these things (or counter sources--memories are an imperfect source) PLEASE put in the comments field. In a later diary I will tackle how to avoid getting into a foreclosure mess AND how to pay off your fixed-rate mortgage up to seven years early without really feeling it.
I worked at Fannie Mae from 1991-94 in an administrative job, leaving to take a job in my field of graduate study.  At the time Fannie was rolling in dough, primarily because of the Mortgage-Backed Securities business. Fannie Mae and Freddie Mac, the two private companies who originated as government agencies during the Roosevelt administration, were at that time the main issuers of Mortgage-Backed Securities, also known as MBS.

When I went away to college, living away from home and being on my own was such a blast. Some of my best memories of school were in that first year -- dorm parties, my buddies on the second floor of Kreuger Hall, football games, and being surrounded by a small city of people my age. Heaven!

I was going to school full time and working between 10 and 30 hours a week to pay my way. I also got a checking account for the first time. Damn, I felt grown up. And then I started bouncing checks.

This is an ongoing series from the national tour for THE UPRISING. You can order The Uprising at Amazon.com or through your local independent bookstore.

DENVER - Last week, I appeared on Fox News to discuss the inflammatory comments by Phil Gramm (John McCain's top economic advisor) and how those comments really epitomize the Republican Party's country clubbish, let-them-eat-cake outlook on the economy.

It's refreshing to see that some businesses are doing well in today's economy.  Perhaps the most success venture going today is the pawn shop.  From Peoria to Pasadena,  pawn shops are seeing a boom in clients.

Inner City Press/Community on the Move filed an administrative complaint against the Federal Reserve Sunday demanding information about a closed-door meeting held earlier this month with the Clearing Corp. (made up of all the top investment banks) where new rules were made for the $60 TRILLION credit default swaps market.

The Administrative Procedures Act (5 U.S.C. Section 553) and related laws require that when the government engaged in rule-making, it must provide notice to the public, and allow and weigh public comments.

   A while ago, in a diary entitled Are Hard Times near? The Great Decline in interest rates is ending I pointed out that the great decline in interest rates that began in 1981 looked like it was coming to an end, and with it American consumers' ability to refinance debt at lower rates.   I noted that if consumers could no longer refinance at better terms, and if their wages weren't growing, the engine of the American economy would stall, not just for a short time, but for a very long period -- What I have called "The Slow Motion Bust."

    With oil prices at $126 a barrel, and $4 a gallon gasoline, the boa constrictor of higher prices has tightened around the average American's budgetary breathing space some more.  A look at how much and how consumers are coping, below.

If you are wondering why the stock market has been soaring when we have a credit crunch, job layoffs, a housing crisis among other negative factors, you are not alone.

But...maybe there is an explanation. I call it the boa constrictor economy.

Hey Barack!  Hey Hillary!!  Want a sure-fire way to win some votes this election season?  Be the first one to come out swinging against the huge, faceless Credit Card Companies!!!  This is an as-of-yet untapped resource of voter frustration, as many people I know are getting screwed over time and time again by them.  It's also a great wedge issue between big corporate Republicans and hardworking Americans.  

Please pardon my rant here.  I just got home from a midnight shift, and feel like I need to blow off a little steam to my 100,000 closest friends before I go to bed.

But Hello!!!  I can't believe I'm not hearing more about this issue.  Just like Big Oil, this is a massive industry that is profiting off the hard times of everyday Americans.  Even worse than Big Oil, they are shamelessly changing terms of agreement...unilaterally increasing interest rates, increasing monthly payments, assessing fees...taking money out of the housing market; taking money out of our economy.

Imagine an additional 2% or 3% sales tax on everything you purchase.  Instead of going to roads, schools, or even our military boondoggles, this tax would go directly to the pockets of multinational companies.  How do you think this tax would poll on the latest Gallup survey?  

Well, Americans vote with their wallets every day. Check your ATM card.  Does it have a VISA or MasterCard logo on it?  Chances are, if your bank is one of the larger ones, it probably does.  This logo means that whenever you purchase anything with your card...be it a latte, a round of beers, or a tank of gas...VISA or MasterCard is probably taking 2-3% off the top of the sale.  This money doesn't go to your favorite store or coffee shop...it goes to the credit card companies.  

Why should we care?!?  How about these apples... These same credit card companies are engaged in a vicious campaign against Americans who are trying to manage their debt on revolving credit cards.  Why should we sponsor this behavior with our everyday purchases?  That's why I've decided to do my part by using cash to pay for my stuff, whenever possible.

The economy is going to be at least bad enough so that we need a new name to call it. A recess is a small indentation while a depression is a larger hole, so I think this new worse economic crisis should by called an Abyssal, and since it comes with inflation, it will be a Stagflationary Abyssal.

It has been reported, and disputed here, that the drop in the value of the dollar will provide a stimilus for exports that will offset the decline in the domestic economy. The report above, reporting on the sharp downturns in american manufacturing, indicates that the "stimilus in exports" theory has failed.

This flows from the fact that the weakness of the dollar reflects more concerns than just the imbalance in trade and declining value of the dollar. Dollar weakness also reflects a global lack of confidence in the role of US manufacturing and trade strength vis a vi the emerging manufacturing, technology, and consumption powerhouses of china and india.

I want to share a first-person account that illustrates a major problem with the credit market in this country.

Credit card companies are aggressively marketing their services to college students, using cheap gimmicks and giveaways to lock them in, and using fine print to slowly raise their rates until they are trapped in a plan they never would have knowingly entered.  

I was trapped by just such an offer several years ago, as a freshman in college.  Students generally get into emergency situations where having credit can be a good thing, and I was no exception: I ended up using my card and maintaining a balance.  It was small potatoes to most, but a lot of money for me.  Just today, I am finally paying off my credit card from the worst credit card company of them all, Chase.  

I included the letter below with my payment stub, and want to share it with the DailyKos community as we discuss the changes that need to happen in the credit industry.  Students need protection from usurious lenders. Also, I hope the credit companies find that the ill-will they engender through deceptive credit practices will affect their bottom line when student-borrowers refuse to patronize the credit companies after escaping from their debt load.

Well, this is just great!

Hannaford Bros. supermarket chain yesterday said a breach of its computer system potentially exposed 4.2 million credit and debit card numbers and has led to about 1,800 fraud cases to date.

The data breach affected customer cards used at more than 270 stores in states including Maine, Massachusetts, New Hampshire, New York, and Vermont, Hannaford said, and lasted from December until early March.

FROM DECEMBER UNTIL MARCH!!!!!!

And it's now, what, April?  At least my bank in Georgia called me last night.  Perhaps I shouldn't have yelled!

Penn State University announced yesterday afternoon that it will be joining the Department of Education's Direct Loan program as a way of ensuring its students maintain stable access to federal aid.

Yet another day of astonishing volatility on the markets today, with the Dow Jones jumping from -1% to +1% in a few minutes after it emerged that a bailout for monoline insurer Ambac was apparently imminent. Financial stocks, which had been sharply down on news of downgrades of Freddie Mac and Fannie Mae by analysts, brutally shot up.

What this makes clear is that the markets no longer know how to value stocks, in particular financial ones, and fluctuate wildly as new "input" becomes available, whether hard news like financial statements or corporate decisions, or soft news like  analyst recommendations or expectations of decisions... And as hard news are coming out in random blobs over time, this uncertainty is unlikely to change.

This might make market watching a lot more exciting, but it is also beginning to have an impact on the real economy, as the logical reaction of the financial world in the face of this uncertainty is to batten hatches, tighten lending criteria, and reduce down credit and investment activity.

Euphoria is followed by revulsion, and boom by bust.

Here is today's scary economic statistic on "underwater" and "upside down" mortgages!

One-tenth of U.S. homeowners hold mortgages that are larger than the worth of their homes, Moody's Economy.com said on Friday.

Nearly 8.8 million homeowners, or 10.3 percent, are in over their heads, its chief economist, Mark Zandi, estimates.

As a result, millions of U.S. homeowners have the incentive to abandon their properties.

The housing market continues to deteriorate and it is no wonder when you consider the bozos who were financing the homes.