Wave Goodbye To Easy Credit

The word "credit" traces its origins to the Latin credo, or "I believe." Profits, paychecks and other rewards animate capitalist economies, but these financial incentives work only because of some basic beliefs — that debts will be paid, that contracts will be honored, that financial data will be accurate, that corporate insiders will act in good faith, that regulators and courts will enforce the laws.

When those basic beliefs waver, the economy suffers, sometimes mightily. In the past decade, private scandal and government laxity led to a loss of faith that crippled lending and investing and helped plunge the U.S. economy into the Great Recession of 2008-09. We're now coming out of the long, deep slump with a palpably different mindset on the financial system and its risks.

The country's transition from easy credit provides the basis for this third installment of a six-part Investor's Business Daily series looking at the post-recession realities for the six drivers that kept the U.S. economy strong and stable from 1982 to 2007. The first two parts looked at technology and globalization; after credit, the series covers the consumer, inflation and government.

The government/policy makers are trying to hold up the house of cards, and they can't succeed without growth in the real economy.

This is so true. All stimulus is, is debt that has to be paid back. Like priming a pump, but in this case, the only thing running through the pump is debt- until the private sector catches on and takes over feeding it 'till it's primed and running.

Well, guess what? The real estate bubble blew about half the water out of the Doughboy and where the skimmer sits, it'll never prime until it is moved to where the water is. And what is the skimmer? Taxes and government spending that is 'skimmed' from the top of the GDP. So, the skimmer must be lowered to reach the new level in the depressed economy or else the pump will continue to run dry.

In fact, if the skimmer (government siphoning off of 'real' money) were 'adjustable' then these sorts of economic dislocations brought on by rediculous programs like "everybody gotta have a house" credit programs would not stall an economy or create bubbles that burst. It's called a 'lillypad' skimmer but even it has it's limits.

But it gets worse. The government has backed a water truck up to the pump trying to prime it (with borrowed water that has to be paid back). [At this point, someone should be asking if the 'leak' has been fixed (easy loan hole in the wall of pool)].

Here's where it gets interesting. Overpowering the system (bigger govt.- bigger pump) without changing pipe size (regulations and other unnecessary govt. bullcrap) will result in pump cavitation- causing little or no flow, which will bring the system to a halt, again.(this is where California is and has been for several years)

As a contractor it is my business to know just how big a pump (how much govt.) can be applied to a system without making major changes to the design of a pool (structurally sound economy). Our elected representatives are unlicensed, uninsured, idiots who'll only make a mess of things as they aren't qualified to do the job they're being asked to do.

First, the national pump (govt.) is trying to pull water through a skimmer (taxes) that is/are too high- due to their own malfeasance in constructing the 'loans to idiots' program which lowered the water level substantially. They created this leak, they should fess up to it.

Second, no amount of 'stimulus' (priming water) will correct the low water level- the skimmer (taxes) must be lowered to the actual level of the pool (GDP) before the system will prime-up and run properly.

Third, if a larger pump is desired (more and bigger govt.) structural changes in the plumbing (regulations and restrictions on economic flows) will be necessary or else it will not be able to 'feed' the pump (bigger govt.) and cavitation will result.

It amazes me that politicians can operate without a license to practice what is essentially nothing more complicated than operating a pool system. Inexperienced fools playing economic contractor can only end tragically. Think what the costs are to us all due to their incompetence? The Health Dept. would close such a pool (economy) with a sign: Closed Due To Public Health Nuisance.

A licensed pool contractor would get this pool opened in a hurry as there are kids that want to go swimming. Your president, senator, or representative couldn't care less because they don't know how to fix it. In essence, our economy has become "A Public Health Nuisance" and those who participate(swim) in it, do so at their own risk. Dow, baby, Dow.

Funny, I say the same thing myself and I am the one who went bankrupt. Easy credit was great back when I was 25 and made $20,000 a year. I had 72 different credit cards and $175,000 credit line.

Who couldn’t see this train wreck coming? Well...me! Oh, my parents tried to tell me but I knew so much more than them, so within the next 10 years, I got in deeper and deeper till I lost my job, then BAM...reality smacks you in the face. Now I realize who was most at blame here, but somebody somewhere should have realized this house of cards is bound to fail. Continuing to give me credit was plain idiotic.

Been years since then and I have no credit cards or a desire for them. I also don’t know my FICO score and don’t care...in fact, I hope it sucks just in case, I get weak ever again.

The real funny thing was after my bankruptcy, every car company in town wanted to loan me money, then the credit card offers started again..straight to the trash they went. Many don’t know, but bankruptcy records are public, so they credit companies pull the list each day (its called the “sucker list”). They figure if you screwed up once, you will go back to that well again.

Not me! HELL NO! Going through bankruptcy was intensely embarrassing and painful to me. I felt a complete failure but was surprised by everyone else smiling and laughing like no big deal. Now I pay cash or debit card. House is paid off, and I don’t get the phone calls.

Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.