Modifying or renegotiating loans in trouble does not seem to be working all that well. Alan Abelson posted a good chart noting the high re-default rate in last week’s Barrons. As it’s not available on line, this graph will have to do. in brief: "About 30% of modified loans re-default in the first quarter after modification and about half within the first year. This suggests modifications have not been very effective."

I fear that our politicians will conclude that the only way out of the problem is inflation.