Debt, the American Way

[dkf]

"We haven't really dealt with the underlying causes of the crisis," Mr. Hyman says.

And the most basic cause is this: "Consumer debt has crowded out business debt. …GE Capital can make more money issuing credit cards to consumers than it can loaning money to businesses."

Indeed, the interest rates charged for many consumer loans used to be prosecuted as criminal offenses. Banks bought off the lawmakers and became loan sharks with risk-management models singling out borrowers they know can't repay—ruining them and everyone around them as their subprime debts choke the economy.

Mr. Hyman argues our economy will never be fixed until government policy encourages credit to flow more freely to those who produce and less freely to those who consume.

If capital is invested in businesses that can create decent-paying jobs, then maybe people won't need so much credit to buy the things they consume.

http://finance.yahoo.com/news/debt--the-american-way-.html

[onethatcares]

1. well, hell yes.

they have to keep up with the payday loan places somehow.

and the new one being that place that can put 5K in your checking account by tomorrow morning, they know the money is "expensive" but it will get you off the payday loan unicycle.

Jeeeeeessssssssuuuuuuuussss, if people had decent jobs with a decent wage, most of those kind of borrowers wouldn't need "expensive" loans to get off the unicycle.

[Vincardog]

2. File this under duh.