Gail MarksJarvis
September 21, 200

The nation’s financial crisis seems to have eased. But that doesn’t mean consumers, investors and the economy are in the clear.

The government proved during one of the most remarkable weeks in the nation’s financial history that it would stop at nothing to prevent a meltdown.

When it appeared that “shorting stocks”—or betting they would fall—was causing financial firms to plunge to their deaths, the government changed the rules and outlawed, temporarily, what has been a lawful practice.

When it appeared that a run on the bank could destroy savers’ money in money market funds, the government stepped forward to insure the $3.4 trillion in the funds.

But cauterizing a wound in the financial system is different than healing the economy.

Despite last week’s interventions by the government, the credit crunch will continue to disrupt plans for families and businesses, threaten jobs, weigh on the economy and disappoint investors.

College students won’t be able to get private loans from banks unless they are willing to pay interest rates around 12 percent and have parents with high credit scores.

With home values down sharply, owners may have trouble obtaining home-equity loans. People interested in buying new homes will have to hunt to find a mortgage unless they have a pristine credit history and a large down payment. Consumers will have to be vigilant about paying credit card bills.

Credit is the economy’s lifeblood, enabling consumers and businesses to buy now and make payments later.

With banks injured by the collapse of housing and mortgage-related bonds, the credit system remains broken…

[ed. Following the path for how to improve your credit is getting trickier - and more necessary.]

Source Chicago Tribune

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