It isn’t just getting loans.
The debt market has a hierarchy. You, the consumer, are at the bottom of the heap.
When you take out debt (eg, a mortgage or car loan), the company that loaned you the money wraps your loan up into a package with dozens to hundreds of loans just like yours, and sells the whole conglomeration into the debt market.
That conglomeration of debt is what no one on Wall St. wants to buy any more. If your lender can’t sell a package of debt into the primary lending market, they in turn have no money to lend you.
Then there are loans made between banks/brokers. One example is “margin debt,” loans made to allow a trader to buy/short larger positions than they could if they traded only the money they have. Hedge funds, for example, are “levered up” to their necks — they might have $1B from investors, but by getting a margin line of debt of say, $10B, they can be leveraged 10:1.
Trouble is, when things go against the fund, the lender gets nervous and they either want the hedge fund to sell off their losing positions, or pay back the margin loan. This is where Wall St. is quickly becoming vapor-locked: they’re selling pell-mell, because the margin lenders are demanding more money to cover the margin calls on positions that are going negative.
Not to mention that what has been disclosed thus far **may** be only the tip fo the iceberg.
I recall a guy buying a $400,000 home who was making about $15,000. How many cases like this are out here?
I said for years this would end badly.....only am surprised it went on as long as it did.