Monkey say why monkey do...
Here is why I hate so much "business journalism."
The recent tightening of consumer credit has shoppers leaving their plastic at home -- and sending retailers into a tailspin.
According to an analysis by Citi Investment Research, the constriction in lending that began earlier this year points to at least a 5 percent decline in consumer spending on goods during the heart of the holiday season. A Consumer Reports survey showed more than half of shoppers intend to rely less on credit this Christmas. One retailer, Circuit City, has already blamed the meltdown in credit for sending it into bankruptcy protection last month.
Let me get this straight. It's a tightening of consumer credit that has stopped people from shopping? You're saying they want to shop, to charge, to take on more debt, but are simply unable to get the credit to do so? But wait, you also said, at the top, that people are "leaving their plastic at home." A crappy metaphor, to be sure, but completely at odds with the second assertion, which is that they can't get credit.
Which is it, WaPo? They're not using their cards, or they can't get credit?
As for the "no one can get credit," story I hear repeated ad nauseum these days, I simply don't buy it. I get at least half a dozen offers of credit card debt at my house each week, and I doubt there's anyone out there who doesn't. In fact, I suspect people with crummy credit histories get more of these, as they are easy marks for the credit card companies. Capital One didn't get into its position as acquirer of Chevy Chase by playing nice with credit cards, unless I recall incorrectly.
(Maybe people can't get as much credit as in the past, especially those who don't deserve it, but this is a good thing. It's called returning to normalcy.)
I have another theory. Crazy, but I'll try it out here: Maybe, just maybe, U.S. consumers aren't completely insane, and in a time of great financial fear, are just deciding to spend less. You know, living within their means? Sure, it's unpatriotic, and it does very little to help the poor, struggling Wall Street bank executives, but sometimes Americans are forced by circumstance to behave in a most un-American fashion.
Naw, that doesn't make a good story when you're heading to DC with your hand out. Gotta be a problem like consumer credit availability, right? Something we can take to Congress or the hapless hacks at treasury, something that looks like a simple thing fix. Give us a TALF, or a TALC, and it'll get straightened right up, eh? Buy up lousy consumer credit portfolios with taxpayer funds, and that will get consumers spending at self-destructive, 2005-ish rates that wishful-thinking executives and politicians confuse with normal? Trickles right down?
I doubt it as well. Sometimes it takes more than a couple practice runs, but even short-sighted, spend-till-you're-bankrupt American consumers can learn to stop touching the stove.