They say that we have a sub-prime meltdown in this country. What exactly does that mean? Well, apparently it means that if your credit score is too low you can forget about getting a home loan. Why? Is the money all gone?

Money is one of those things that is hard to define. So hard in fact the government has a bunch of definitions for it. M1, m2, m3, or m whatever. There are more definitions of money supply than you can shake a stick at.

Some people believe that the consumer price index is the measure of inflation but money supply by definition is the inflation index.

So what happened to the money supply? Did it shrink? Is that why there is no money available for sub-prime loans?

No. Actually the money supply is growing faster than the money supply people want it to. So why don't we have money to loan?

Bernanke. He raised the Federal Funds Rate, which lead to short-term rate increases, which lead to major rate increases for adjustable rate mortgages.

This "little" change by the Fed led to major defaults in home mortgages. This has "brought down" many mortgage companies and Wall Street investment bankers.

Was this the intended consequence or an unintended consequence? Either way it was a disaster. Anybody who thinks Ben S. Bernanke is one of the "Good Guys" better take a closer look.

His stated objective of nipping inflation in the bud has instead lead to a possible recession and much pain for a lot of Americans.

Everybody is pointing fingers saying it is the fault of (take your pick) lying loan applicants, greedy mortgage brokers, real estate agents that wanted a sale at any cost, or investors hungry for one more house to flip.

They are all guilty, and none of them are guilty.

If Bernanke hadn't raised the rates the party would still be going on. If he had only "nudged" the rates maybe we could have slowed down without stopping. Maybe only a few people would have lost their homes.

The Wall Street guys who created these "terrible" negative amortization loans and then paid huge rebates to get mortgage brokers to sell them just picked up their marbles and walked away.

But they didn't go far. They are still making sub-prime loans, but now they are making them on commercial property.

Lehman Brothers was right in the middle of the sub-prime melee. They were providing wholesale lines of credit (warehouse lines) to mortgage banks (conduits) and they were buying "bundles" of loans to securitize. So what happened to them?

Lehman Brothers Small Business Finance is right in the middle of the new lending frenzy, small commercial sub-prime. Should anyone be surprised?

After all, the money supply keeps growing and they have to do something with all that money.