I'd keep repaying my debts. When you borrow money, you pay it back, not walk away. Something my daddy taught me.

This whole thing started when the government forced banks to make sub-prime loans to people who couldn’t afford to make the payments in the first place. Likewise you had people purchasing homes at the peak of the price bubble (how stupid is that) getting interest only loans, 100% financing, etc. Everyone and their mother knew the housing prices were going to slip back (they always do.

My philosophy is no bail outs period and let the market sort things out. The tax payers are going to get soaked into the trillions of dollars when this is over and so far it’s not helping one single bit nor is the money being used how it was intended. The bailout is a scam and serves nothing more than to allow the government to get control over more of the private sector. The government largely caused this mess and now they are forcing us to pay for it. The second half of the root cause is just plain financial stupidity by some home buyers and others that do not live within their means or do any kind of financial planning even on a simple level.

They way to fix this problem is for the government to step out of the way, lower personal income taxes, cut cap gains and let the private sector fix this. I think we’ve all been around long enough to know government doesn’t fix things they break things.

Regarding the credit issue, I’m sure it’s out there but I frankly haven’t personally seen it. My bank just raised my CC limit… again. I have no problems at all getting car loans, home equity loans or anything else I want. The banks seem quite eager to loan money and in fact I just inquired about a loan on some property I was considering and the bank said no problem at all and I’m just Joe the Plumber, no one special.