To understand the current situation on the credit market read this informative article in the New York Times

In the fall of 2008, a credit squeeze ballooned into Wall Street’s biggest crisis since the Great Depression. As hundreds of billions in mortgage-related investments went bad, mighty investment banks that once ruled high finance crumbled or reinvented themselves as commercial banks. The nation’s largest insurance company and largest savings and loan were seized by the government. Only the passage by Congress of a $700 billion bailout plan in October 2008 and actions by the Federal Reserve to pump money into the system headed off a full-scale meltdown.

But while financial Armageddon was avoided, the crisis spread around the globe, toppling banks across Europe and driving countries from Iceland to Pakistan to seek emergency aid from the International Monetary Fund. A vicious circle of tightening credit, reduced demand and rapid job cuts took hold, and the world fell into recession.

Origins

The roots of the credit crisis stretch back to another notable boom-and-bust: the tech bubble of the late 1990s. When the stock market began a steep decline in 2000 and the nation slipped into recession the next year, the Federal Reserve sharply lowered interest rates to limit the economic damage.

Read more…Credit Crisis — The Essentials

Listen to a debate over Debt Bailout.

Read more on MyCreditScoreScale.com Blog.