10/14/08

About That Loan

As households have gone deeper into debt, their "financial flexibility" has badly deteriorated, as Contrary Investor shows in this disturbing chart, definitely a contender for chart of the year.

Think about this in relation to the sudden increase in the cost of credit noted here and here, and you gotta conclude that household spending will decline precipitously.

This is our financial system: When going into debt would be bad for you, you can have all you want. When you need it, you can't have it.