Quite simply the economy sucks because we the American people have borrowed too much, and we are concerned the economy is going to get worse, not better. There are banks willing to lend, they are being more picky about who the lend their money, because they are concerned that they may not get repaid. Most Americans have figured out that they should borrow less than they were borrowing. The notable exception is our government which is borrowing like there is no tomorrow.
I was out shopping with a buddy. While our wives were out shopping for clothes, we stopped at Best Buy and looked at a beautiful 55″ TV will all the bells and whistles. Due to an zero interest promotion, I could have borrowed the money to buy the TV and only had to pay $65 per month for the next 36 months. I’d really like to have the TV, but I don’t want another $2300 in debt. The current TV in our living room works well enough. Yes, it’s a second hand analog TV, but it does what we want it to do. Likewise I could trade my car in for a new Ford Ranger for less than $320 for the next sixty months. My car still runs, and I’d just as soon have the money in the bank thank you.
In other words, the biggest problem our economy has right now is a lack of confidence. I’m concerned that the trend in the economy is toward the economy getting worse, not better. If the economy gets worse, I’d just as soon have cash in the bank, and not have any more bills. Therefore, I’m not the least bit surprised when businesses are reluctant to spend money or hire people and would rather sit on some extra cash. Furthermore, I understand why banks would rather have the money sitting in their bank than lending it to someone who might or might not repay it.
-You can’t really put it any more straightforward than that.