The Tide of Easy Credit is Going Out

Filings are up.  Delinquencies are up.  Gee, what a surprise.  Credit is tighter (translation: those "hope and change loans" are going away for now.  The stupid credit is not available at this time.)

Do you know what economic deflationary force exists that doesn't get much press or thought?  When the loan officer, bank president, credit committee, etc. says "No - your credit request is denied".

Trust me.  A LOT of the loans that are granted and closed during "high tide" are totally stupid.  They are made by stupid people to stupid people.  When "low tide" eventually comes to the beach, credit will still be available but many of the standards are much, much higher as well as the interest rates charged.

Ronald Reagan once said that a recession is when your neighbor loses his job and a depression is when you lose your job.  It could also be said that a recession is when your neighbor files for bankruptcy and depression is when you file for bankruptcy.