Tuesday, May 19, 2009

The Credit Hole

If you read nothing else today, read this piece (hat tip: Orthonomics) at the New York Times, showing how their economics reporter got himself into major debt. As I wrote on Orthonomics, what is so scary about this piece is how easy it is for a rational, thinking person to lose control.

Congress today passed new laws regarding credit. Most of this is probably going to backfire on the American populace as always, but at least they're trying... right? Right?! ...sigh.

The WSJ has the highlights of the bill. At least most of these make sense; the bigger question is going to be what the unintended consequences will be. (If anyone thinks credit card companies are just going to accept this loss and yet still approve credit as always, they're simply foolish.) What's likely is as this New York Times piece details, which is to basically charge more to people with good credit, which will negatively impact the ability of small businesses and people with good credit to borrow and invest as they have been able to. They'll also charge fees to retailers - which will in turn pass it on to consumers.