According to banking analyst Meredith Whitney, making it harder to borrow money is bad because it will reduce consumer buying power. Is that a bad thing?
I really don’t understand. Shouldn’t people who have less money spend less money? If you have bad credit, shouldn’t you stop borrowing money? I saw a flyer for a local auto dealer who offers to fix your bad credit by loaning you more money to buy a car. How is that a good thing? You haven’t been able to pay off existing loans so they’ll give you another loan. I know why they do it — you pay interest and, when you can’t make payments, they repossess the car and sell it to someone else. They win; you lose.
Credit is too easy to get. It was too easy to get when I was a college student and it’s too easy to get now. I know someone with no earned income who has a credit card. How does that happen?
The government isn’t exactly a good role model in all of this. Government budgets seem to follow the logic “the economy is bad so we have less revenue so we should spend more.” Ta-da! Small deficit becomes big deficit.
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December 20, 2008 at 2:14 pm
Melissa
I got my first credit card when I was in my second year of university. It came addressed to “occupant”. I had about 4,000 in income for the entire year and they gave me a $2,000 limit. I used it solely to buy textbooks and never carried a balance. I think it helped me to establish credit because the government student loan does not help your score out. A credit card is not a bad thing if you responsibly use it, although when did responsibility factor into debt nowadays (says the person with a severe amount of student loans, a mortgage and about 8 credit cards).
December 21, 2008 at 6:51 pm
dave
not that i’m in favour of easy credit, but i think that if people stop spending, then the retail industry suffers, and more people lose their jobs. it’s a vicious circle.
December 21, 2008 at 7:36 pm
Michele
Easy credit artificially inflates the economy. In a free market economy, some businesses will succeed and some will fail. You can delay the inevitable but not forever.