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http://market-ticker.org/archives/1422-The-Consumer-Credit-Game-Is-OVER.html

Karl does make some good points. As far as the credit crisis right now, there are two reasons credit is falling. One, those with good credit scores don’t want to borrow. And two, those who need to borrow aren’t creditworthy. The banks have been rocked by ‘jingle keys’ and many who just simply don’t feel they have to meet their obligations. The banks are engaging in damaging business policies by trying to recoup their losses on those who do pay their bills. Another vicious cycle in action.

I pay my bills on time and have excellent credit, and Bank of America just cut my credit limits 90%. The feeble excuse the manager gave me was that they were being audited now by the government and needed to lower their credit exposure across the board, so it didn't matter what my score was. They were cutting everybody.

I told him if they did this for all their customers, their credit scores would be damaged and nobody would be able to borrow any more money for things like mortgages and business loans, and this would be very bad for the banks and the economy at large. I was stunned when he agreed with me! He also agreed with me on the “vicious cycle” idea. But he wouldn't budge.

This whole thing with the banks doesn't make any sense to me at all. The government took their toxic assets off their books, right? Why are they clamming up now and hunkering down? The only conclusion I can reach is they're still in some kind of trouble, and we're not being told about it.

If you listen to Bernanke, Geithner, and the rest of that crew, everything is just fine and dandy and we're on the road to happiness and prosperity once again. They're going to have to work some magic to get people to buy during the holiday season coming up. With 12% unemployment here in California and no credit available, I can't imagine we're going to see a big turnout at the stores.