Is the era of easy credit over for the long haul?

Sunday October 12, 3:22 pm ET
By Adam Geller, AP National Writer
As easy credit dries up, a nation reliant on debt navigates a new financial landscape

An inflatable gorilla beckoned from the roof of Don Brown Chevrolet in St. Louis, servers doled out free bowls of pasta and a salesman urged potential customers to "come on up under the canopy and put your hands on" a new set of wheels.

But sitting across from a salesman in a quiet back room, Adrian Clark could see it would not be nearly that easy. This was the ninth or tenth dealership for Clark, a steamfitter looking for a car to commute to a new job. Every one offered a variation on the discouragement he was getting here: Without $1,000 for a downpayment, no loan.

"It's just rough times right now," Clark said. "Rough times."

For Clark, and for a nation of consumers heavily dependent on credit, there are growing signs that those rough times could prove to be more than just a temporary problem, that they could be the beginning of a stark, new reality.

Is America's long era of easy credit over?

Experts say that even when the current credit crunch eases, the nation may finally have maxed out its reliance on borrowed cash. Today's crisis is a warning sign, they say, that consumers could be facing long-term adjustments in the way they finance their everyday lives.

"I think we're undergoing a fundamental shift from living on borrowed money to one where living within your means, saving and investing for the future, comes back into vogue," said Greg McBride, senior analyst at Bankrate.com. "This entire credit crunch is a wakeup call to anybody who was attempting to borrow their way to prosperity."

http://biz.yahoo.com/ap/081012/end_of_easy_credit.html

unless they could prove that they had a full time job. I've noted over the past two decades how much easier it was for EVERYONE to get credit. Our illustrious representatives had to see this coming but the GOP stranglehold on our government would not touch it. :(

The credit is still easy with great credit scores.. but easy credit has just been a stopgap measure to keep people shopping to keep the corporations from losing money, all the while they have sent jobs to China where they can pay a fraction of the wages, and NO health care for the workers.

...shows credit is too tight?

If he used to be able to get a car without putting down a thousand dollars, that shows credit was too loose.

It doesn't seem fair that my generation had to pay that tax. Of course we didn't get pensions either so I guess that evens it out? right? Or were we just screwed by the Republican party on all counts?

In response to the OP, easy credit should never have been allowed. Credit makes things more expensive, and is dangerous as the future can be difficult to accurately predict. Some kind of small loan, with a time-limit, would be a better system. Like, you could get a $100 loan which you must pay back within 30 days and you cannot take out another loan until you have payed back the first.

people wouldn't be reduced to borrowing everything. If we had reliable public transportation, there would be less need for two or three cars in everyone's drive.

There are just too many things wrong in our economy. AMericans have been encouraged to borrow money to buy crap made in china by workers who now hold the jobs American workers used to hold back when American workers USED to have jobs making those things that they could afford to buy WITHOUT charging it on a credit card.

Make your head spin?

That's the problem. It's a vicious cycle. We export our jobs and import our junk. We borrow money to pay for things that our parents and their parents could have bought with their old salaries.. HOWEVER.. they knew that you saved up for special things, that you didn't NEED 80 pairs of shoes, or a TV the size of a fireplace, and your kids did not need powerized jeeps to ride around the neighborhood.

The economy has changed, but WE have changed. Our consumerism and the death of our culture, is killing us. People shop for entertainment now, and they borrow to pay for it. As an interior designer I can attest to the fact that there are women out there with so man shoes and purses that they need a separate closet and sometimes ROOM to house them all. I've met clients that bought newer houses and had the 20k worth of granite torn out because "they weren't crazy about the color", along with thousands of dollars worth of new cabinets...

I think that the loss of "easy" credit may be a boon to our culture. Perhaps it will force a return to the basics, and if our government refuses to stop borrowing wantonly, at LEAST we'll learn to live within our own means. That's a start.

It gets you used to the idea of charging everything and especially large ticket items.