Credit is finally available, but no one wants it - Aug 2010
FORTUNE -- Finally, nearly two years after they were bailed out by Congress, big banks are beginning to ease lending standards for individuals and small businesses. But it's not exactly having the reception many believed it would. Just when credit becomes more available, there's little evidence of a surge in demand for it. Banks also reported that they stopped cutting existing lines of credit for commercial and industrial firms for the first time since the Fed added the question in its survey in January 2009. And as for consumer loans, banks also reported easing standards for approving loans.
All this would typically be good news for businesses and consumers eager to borrow, but the Fed's report only highlights the depths of America's economic troubles. Credit is available, but demand remains flat.
This isn't all that surprising. The latest economic indicators paint a very exhausted consumer: In the years leading up to the financial crisis, he bought too much house and too many cars. He's in burn-out mode - more focused on either saving or paying down credit card debt than buying more appliances and gadgets. The amount consumers owed on their credit cards during the three months ending in June dropped to its lowest levels in more than eight years, indicating that cardholders continue to pay off balances in the uncertain economy, according to TransUnion's second quarter credit card statistics.
Perhaps what the Fed's quarterly report is really saying is this:
There's a growing distaste for credit. The American consumer is the child who ate too much and spoiled his dinner. And even if you hand him his favorite meal on a silver platter, he's just not that hungry.
LINK
This is in line with what I've seen over the course of the last few years. Very few people even want credit of any kind any more, and the ones that do (the just-in-case people) are afraid to use it. It's an amazing by-product of great depression 2.0, but I wonder how long it will last. Perhaps this has a hand in why sales are down too. Tough to buy Internet porn with cash.