The Times Have Changed

The Big Picture
Yes, there is a new sheriff in town! It is now abundantly clear that the so-called sub-prime mortgage debacle may be just the tip of the iceberg of the problems in the modern finance markets. Easy to obtain, cheap credit is the great lubricant that makes the engines of commerce really hum. Unfortunately the "easy to obtain" and "cheap" characteristics are the part of the formula that ultimately cause the credit system to break down. Credit availability is largely a function of the lender's confidence that they will be paid back with reasonable interest. Unfortunately, there are fewer institutions, or individuals, that find they have enough confidence in borrowers to lend money without what would have been significantly excessive guarantees or collateral just six months ago.

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