Tuesday, May 19, 2009

No Credit for You

When one squeezes the balloon in one direction, it grows in the other.  What I suspect will happen now that the Senate has passed credit card reform legislation is that the House will surely approve some version of the bill, and it will be undoubtedly signed by the President; but ultimately it will have an effect on consumers, and not necessarily a good effect.  People will find it a lot harder to get credit, and the convenience of a credit card.  In order to counter the impositions placed upon them by this legislation, credit card companies and banks will offset the new demands by making it a lot harder for people to obtain credit cards.  This may be momentarily helpful in that Americans are credit crazy and heavily in debt right now, and perhaps it will deter bad behavior; but it will also still commerce, and a slow economy could continue for a much longer time.  When you fiddle with markets, markets tend to fiddle back.


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