I was going to respond to Virginia Postrel’s silly article claiming that current levels of consumer debt are nothing to worry about. But I don’t need to, because Henry Blodget, without mentioning Postrel directly, has done it for me. All I need to do is provide the connection: credit card companies were happy to lend, and consumers were happy to rack up credit card debt, because they both knew that if the credit-card balance got out of hand, it could always be paid off with home equity. Now those days are over, and we’re entering a consumer-credit crunch.
Postrel’s right that the media has cried wolf in the past when it comes to consumer credit. But she forgets that in the fable, eventually the cry is for real. Now is that time.