It's Not A Crisis of Capitalism, It's a Crisis of Easy Credit

David Warren pens an essay on the economic debacles of the past few days:

"Are we witnessing the final crisis of capitalism? (One utters the phrase out of nostalgia for the glory days of Marxism.) I doubt it. The meltdown in stock markets all over the world is painful and distressing, but it will pass. For it is not capitalism that is on trial, but rather the idea of cheap and easy credit."

He's got a great anecdote about this too.  While a small business owner, he was refused a business loan, after going through a lengthy review of his application. After being turned down for a business loan, he applied (at the same bank, different counter) for a personal consumer loan for the same amount. Bingo! Ten minutes later, he was granted the personal loan. No problemo!   In a nutshell, that's behind much of our current crisis, cheap credit given out widely and to folks who are high credit risks. From Warren:

"Over several generations we have rebuilt an economy that once rested on goods, services, and tangible assets. It now depends also on kiting, with wonderfully sophisticated credit instruments -- like a postmodern building, supported as much from above as below. In the longer view, it is well that gravity asserts itself the sooner, and we reacquire the benefit of a solid foundation."