On the consumer side it is all about the ability to service debt and that relies on incomes and job stability. Anyone who really thinks that is going to get better anytime soon is not paying attention. This is the universal truth that brought most people to this site 2-3 years ago. Everyone here sensed that the house prices could not continue to go up without outstripping the ability of the general public to service the growing debt.

As far as the credit crisis goes, from the banking and lending perspective, it is a bad collaterol problem that creates an insolvency situation. This is why I keep stating the old Accounting formula which is the basis for balance sheets: Assets – Liabilities = Owners Equity. The reason for all of the off-balance sheet shenanigans is to prevent the impact to that equation. Any major write downs in loan values as a result of impaired collateral affects that equation.