Wednesday, October 01, 2008

Is There A Shortage Of Good Borrowers?

Although the supply of credit seems to be faltering, the price of credit stays low. Usually when a supply falters, demand drives the price upwards. What is happening here?

Could there be a lack of credit-worthy borrowers?

Has seven years of no increase to real income depleted the supply of credit-worthy borrowers?

In bad times, many people who once were credit-worthy lose that status.

Perhaps if they had better jobs, they would be more credit-worthy and that would drive the price of credit up. That would make the banks happy.

Banks need good borrowers.

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