Very interesting story in yesterday’s WaPo on credit woes spreading from homes to auto loans and credit cards. Simply put, there is already a flight to quality among lenders — of all kinds — looking to shed their riskiest borrowers.
Customers who as little as 18-months ago looked like highly profitable, high interest rate borrowers now look like sure defaulters. Worse, in the case of auto and consumer debt, the debt is fundamentally unsecured. The banks are loathe to take on real estate, how do you think they feel about a four-year-old minivan?
In the short-term, cash is king. Boats, SUVs, second homes. There are bargains to had — if you have the money.
