Originally Posted by Bill8

wig may have different answers but I'll say you are talking about two different kinds of lending.

The bailout stopped the collapse of confidence that was causing short term and overnight lending to "break the buck".

Then, the banks were so frightened by what had just happened, and still so insecure about all their guesses about who still held hidden bad paper, that they played it extra safe and refused to lend to anybody but those who already had money. They worried that that the shareholders might later say "you should have known better", now that the shareholders were alerted to all the shoddy practice.

And that pushed almost all small business off the lending table.

The "invisible hand" of the marketplace at work.

Thats why more-managed economies can beat less-managed economies. The invisible hand is blind, it only reacts, never acts. When reaction can solve a problem the invisible hand works perfectly well. But when you have to act to solve a problem, you have to guide the hand.