We are free to borrow as long as we can repay!

This is the threat I got:

"Neither businesses nor consumers would be able to borrow money, he said, adding that such a situation could result in the world’s largest economy grinding to a virtual halt."

I don't understand at all. Sure we can borrow if we can repay or pay the loan and interest! If the banks can't or won't lend, the US administration should use the USD700 billion to lend to us, people who can repay! Of course, if you can't repay, no one should lend or borrow. This is the lesson you guys must learn from the subprime mortgage failures: NEVER borrow if you cannot repay and NEVER lend when you know the borrower can't repay!

So where and what is the threat? Do you mean we must borrow and lend when the borrower cannot repay? And if that does not happen, then it is a threat? The whole story about subprime failure lies in poor credit or over-borrowing. What's wrong if poor borrowers cannot borrow and bad lenders cannot lend?

I am sorry I am absolutely confused. I give up! Assume there is a genuine threat, then why must we do the evil Bailout Plan?