Those unlucky enough to be needing to refinance with poor credit will no doubt be aware that this is not as simple a proposition as it was just a few short years ago. As recently as 2006, anyone with a pulse could refinance just about any loan regardless of how bad his or her credit was. How things have changed. Enter one financial crisis stage left and the real losers become immediately apparent. And they are certainly not the bank CEOs leaving with multi-million dollar bonuses. No, they are the typical man-in-the-street facing a difficult decision. Is it better to walk away from an un-payable loan or refinance at most likely exorbitant interest rates?

Judging from the amount of mortgage delinquencies in the US currently, many are unwilling, or more likely, unable, to refinance their loans thanks to the continuing credit crisis in the banking system. Credit Suisse has just announced a $1.5 billion profit – but this came at the cost of 5,000 jobs, and begs the question what is more important to the governments or financial system. The general population or the tiny minority of shareholders. Clearly the shareholders come first, which is making a mockery of the government bailouts of the banking system, because the long term after effects of massive unemployment will surely bring down the shareholders in the end. Although, Credit Suisse was one of the few banks that did not need direct government aid – they went to Middle Eastern governments for massive loans instead – they must surely have some accountability in the countries they operate in. Or at least one would think so.  But this seems not to be the case and an extra 5,000 on the dole is a perfectly acceptable price to pay.

But, this is, as usual, shortsightedness on the part pf the governments concerned. They appear to feel that a swift return to profit as the cost of thousands of jobs is a worthwhile endeavor. The long term negative effects of a large pool of untrained, and out of work labor force may not immediately have an effect on the bank’s balance sheets, but there is still a social and economic cost to pay. Unless, of course, you happen to work for an investment bank. Morgan Stanley, despite disappointing results, recently decided to put aside $3.9 billion, or 71% of their institutional securities revenue to pay their staff. “Retaining and attracting talent,” is the way this is described. With unemployment rising, this is a little difficult to swallow for the rest of us.

The government jiggery-pokery going on over the last year or so is quite a sight to behold, and I defy anyone to actually understand what is really going on. Which is, of course, their intention. The massive amount of government aid which has all of a sudden been, “paid back,” out of quantative easing monies used to buy bonds is so utterly confusing, the only thing certain is we are headed into a worse situation than anyone is prepared to admit to. All of which is bad news for those needing to refinance a mortgage with adverse credit rating. I would suspect the only people able to raise substantial refinancing with bad credit currently are those at the top of the banking tree or federal government employees above desk clerk level. UK homeowner loans are a thing of the past unless one happened to buy the property in the last crash.

It is only a matter of time before the government is forced to shed employees, as has already started in certain countries. A quick look at the state of the Irish economy should give an insight as to what will start happening in the US, the UK and across Europe (with the possible exception of France, where a government job is a job for life, regardless of performance). The Irish are planning on losing more than 17,000 public sector jobs over the next year, and I suspect the biggest cuts will be in typical government short-sighted fashion – education and health care. The British Government Inc recently announced (after months of saying there would be no cuts) a drop in education spending of £100 million. Despite having printed £125 billion in new money. Clearly, there is no end in sight at the moment and I fail to see how saving £100 million on education will help in any way shape or form. On the other hand, I suppose there is no point in educating your teenagers if 50% of them are going to spend the first ten years of their working life unemployed. At least they haven’t started a war yet – which is the tried and tested way of boosting the economy.