He Who Has the Gold isn't going to take it lying down

With all the cheering going on among the consumer advocates you'd think the new credit card law is the answer to borrower's prayers.

It is, but it isn't. Washington would love us to believe they're standing up to He Who Has the Gold but the reality of the current show of force is that we're all going to be paying for it, one way or the other.

In the first place, the law doesn't go into affect for nine months. The Squaliformes have plenty of time to slap consumers and Washington around a bit.

Consumers will be pounded with more and more fees, usurious interest and manufactured situations that punish even responsible customers. And why would they do that? Why would they try to drive off customers?

Because they're patient. It's their money and it will go elsewhere until their minions in Washington snap out of their giddy victory swoon.

See, a huge chunk of the US economy is retail driven. When He Who Has the Gold balks at retail credit under the new rules next year, all those retailers who have handed their highly profitable CC operations off to He Who Has the Gold are going to find armies of irate FORMER customers.

Here's a graphic of what's going to be happening:

We're going to be transitioning back to an economic model that requires more and more consumers to have the money to buy something before they actually acquire it. In a sense, that's a good thing - but not for the Squaliformes or the economy as a whole. But instead of letting the lenders suck huge percentages of the economy onto their balance sheets as receivables, consumers will accumulate (as in, save) their own funds to acquire things at a future date.

And what will the Squaliformes do in order to prevent this from lasting too long or letting it get too far out of their control?

Simple - hold their breath and stomp their feet. They'll continue to hold back credit for all kinds of commercial needs. They will toss back the TARP and PPIP money. The economy will stagnate further and eventually this new administration and the socialists on the hill will return to their rightful place at the feet of the Squaliformes or face being run out of office because of utter economic stupidity.

If we could ride this out to the point where there is actually competition among Squaliformes and they really need consumers to trust them, we'll regain the upper hand. But we'll need an entirely new set of faces in Washington to make that happen.

The Honorable Judge Roy Bean