Credit is still Frozen, experts say at least until 2010Tuesday, November 11th, 2008
This is a really tough situation for most typical Americans. “Credit Freeze” in other words means “life freeze” in your average household. Why you ask? Simply because the U.S. is run not by cash, but by credit. Many households live their lives in consistent debt, which isn’t necessarily a bad thing outright, IF that debt is funding ASSETS.
But, as we all know, that debt is more likely to be funding a Playstation 3 with a matching surround-sound home theater system, than it is to be funding an investment of any kind. The economy ran into a brick wall because too many consumers are paying with “imaginary money”. This same imaginary money has also disappeared from 401Ks and retirement vehicles. Amazing right? No, I think it’s sad.
As a society we’ve been trained and developed to be uber-consumers. We don’t pay for things with our own money, we simply buy it with credit, then pay the monthly bill. It creates a situation where borrowers become so loaded with debt, that there is no room to “wiggle” financially.
Now that there’s been a virtual FREEZE on lending, what will these consumers do? Especially during holiday spending season…Hmmm, good question
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