Loan Blight

Finding money to borrow is getting harder and harder. For the past few years, people took out mortgages on their homes like crazy to finance construction of home additions, second home purchases, vehicles, and debt consolidation. Now that the mortgage market is drying up, folks are either turning to unsecured loans or forgetting about borrowing at all.

Many of the construction guys who frequent the Hot Dog Truck are seeing a big slowdown in their business since nobody is spending money like they were a few years ago and they're unwilling to take out loans.

If this continues, the economy is going to go into the crapper until more money is made available to lend. Borrowing money is good when it's inexpensive to do so, but if interest rates are high or there is poor liquidity in the market, it becomes counterproductive.

People who take out mortgages to finance consumer debt are being shut out too. They have no recourse to pay down ridiculously high interest rates on credit cards and tighten their belts or go into default.

Borrowing what you can't pay back leads to trouble and the mortgage industry's loose standards over the past few years have created a situation where defaults are common and loans are scarce.

If people don't spend, we could all be in trouble.

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