DoingHomework wrote:If this is the same effect I think it is the reason is NOT because people are being denied credit. The "problem" is that people are saving more and paying down their credit cards.
When people spend less it is good for them individually but bad for the overall economy in the short term.
“Demand for credit has just gone through the floor,” is a key quote from the article. It is not supply of credit from banks that is the problem. It is demand from consumers.
We HAVE gotten the short end of the stick in the bailout.
Yeah, last month there was an article (can't remember where) talking about how US consumers had decreased their revolving credit debts at a much faster rate than economists had projected. My initial response was, "wow, people are finally taking responsibility for themselves, great". Unfortunately much of that reduced debt burden was in the form of write offs from the CC companies and even the debt being paid down legitimately is a bad sign for the economy.
It's one of those damned it you do and damned if you don't