When the recession will end...

Not when lenders make money, but when investors make money. Read here from Arnold Kling:

'[Hyman] Minsky described this risk tolerance cycle in terms of three phases: hedge finance; speculative finance; and ponzi finance. During the hedge finance phase, investors are allergic to risk. You can say, "Here is a project that is probably going to offer some really nice returns," and the investors reply, "No, I don't want to touch it. I'm not buying anything that has a down side."During the speculative finance phase, investors make reasonable trade-offs between risk and return. During the ponzi finance phase, investors ignore risks. Giving subprime borrowers option ARM mortgages was ponzi finance in every sense of the word.

'Applying the Minsky framework to the current environment, I think it is pretty clear that we have gone from ponzi finance to hedge finance. Investors have unloaded risky assets in order to buy Treasury securities. The word of the day is de-leveraging, meaning that firms are trying to shed their excessive debt loads, build up cash reserves, and strengthen their capital.The instinct of policymakers is to fight this deleveraging process.'

Because the financial sector contributed millions of dollars to the political process, however, our elected officials and millions of others are convinced that we must save the bankers and financiers to save the economy. I think not.