Wave Goodbye To Easy Credit
The word “credit” traces its origins to the Latin credo, or “I believe.” Profits, paychecks and other rewards animate capitalist economies, but these financial incentives work only because of some basic beliefs — that debts will be paid, that contracts will be honored, that financial data will be accurate, that corporate insiders will act in good faith, that regulators and courts will enforce the laws.
When those basic beliefs waver, the economy suffers, sometimes mightily. In the past decade, private scandal and government laxity led to a loss of faith that crippled lending and investing and helped plunge the U.S. economy into the Great Recession of 2008-09. We’re now coming out of the long, deep slump with a palpably different mindset on the financial system and its risks.
The country’s transition from easy credit provides the basis for this third installment of a six-part Investor’s Business Daily series looking at the post-recession realities for the six drivers that kept the U.S. economy strong and stable from 1982 to 2007. The first two parts looked at technology and globalization; after credit, the series covers the consumer, inflation and government.
(Excerpt) Read more at investors.com
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