I agree with Equalizer in certain respects on this issue. I have stated many times before on both this blog and the Ben Jone’s blog that you cannot expect J6Pck to understand Time Value of Money concepts. Very few people do…even highly educated people. Unless one has had training/education in finance, economics, and business accounting, then they probably don’t understand why it’s critical to ask for an amortization schedule before signing a loan..any loan. Doing so immediately highlights how much interest and principal is being paid and you know there is a problem when the number in th Principal column grows instead of shrinks. This may sound rudimentary to most who post on this blog, but I assure that there is a large number of Americans who don’t understand this.
Should they be bailed out? No. It does illustrate the need for much stiffer regulation though in the lending industry akin to that in the securities industry. The galling thing about this is that there are a lot of policy makers who should have known how big a risk they were taking by reducing the interest rates so much and injecting so much liquidity into the market (M3).