Tuesday, February 9, 2010
U.S. Consumer credit fell for 11th straight month
This article talks about how people are not borrowing as much money like they used to before the start of the recession. This may seem smart from the consumer stand point but it makes an economic recovery much harder to achieve. Since people are borrowing less money they are also spending less money which is not good in a recession. the article also talks about how unemployment is effecting peoples rate of borrowing money
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Another problem with borrowing is that the banks are still tightening standards to qualify for loans. While the article said "less banks are tightening standards...", it still means that banks are tightening up standards, which makes it incredibly hard for even some consumers with above average credit ratings to borrow funds. This is shown by the amount held in some banks reserves that were showed in the lecture last week. Banks shouldn't go back to handing out loans to anyone with a signature, but there does need to be some looser requirements to increase borrowing and subsequently spending.
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