Smaller cities, especially those supported by colleges seem to have been partially insulated from the current downdraft in the economy. Yet, even at the grassroots of America, the current economic downturn is palpable, yet not as visible.

As readers familiar with this space are aware of, we travel the state of Texas and less frequently the United States in the pursuit of vicarious glory throught our progeny's tennis habit.

Last month, we went to Wichita Falls, Texas and reported on the fact that the neighborhood family owned Mexican foold restaurant was doing big business while the trendy Cafe' chain was steady at best.

This time around we found that the fact that Interstate 35, which is very busy, is helping to keep Waco, Texas is decent shape. Hotels are doing fair business, although we had no trouble extending our stay at a franchise owned Hampton Inn, part of the Hilton family.

The I-35 Cracker Barrel (see Market Moves below) was doing brisk business doing breakfast, lunch, and dinner, althought the wait staff was fairly aggressive about hawking the gifts and candies in the front, and it seemed as if few of the dineres were taking them up on any frills.

One thing with national data was clear, thought, Wal-Mart was packed, at all hours of the day, early morning and late into the evening.

The Dark Side

Just as the hucksters on Wall Street brought the global economy to its knees, small town America faces its own potential hazards, as unscrupulous business practices prey upon the unsuspecting during hard times.

In Texas, a new wave of operators is starting to appear. The pitch is that if you put up your car as collateral, you'll get fast cash. The catch is the interest rate and the potential for the loss of your car.

According to the Waco Tribune-Herald: "Title loans work like this: A consumer wanting cash agrees to put up his or her vehicle as collateral. The title must be clear, meaning the consumer owns the vehicle outright. The company looks up the vehicle’s value and then makes a loan offer based on that. The most companies will lend is typically 33 percent of the value."

Next, "Once the loan is made, consumers have to pay the money back after a specified amount of time, usually a month. If they don’t, the company has the right to take the vehicle and sell it to repay the loan. Often, a company will request a copy of the vehicle’s keys before the loan is made to assist with that process if necessary. The catch is that the loans come with high interest rates and hefty fees." In fact "the annual percentage rate averages about 300 percent."

And if the loan is not paid off in time, it rolls over, as do the fees and the interest rates. According to the article "The end result is that people can pay hundreds of dollars per month to keep their car without ever paying down the original loan amount. In the end, that burden becomes too much for about 12 percent to 13 percent of customers, who lose their vehicles, reports on the industry have estimated."

And of course the legal system is involved. According to the report: "the companies that offer the loans usually use loopholes in financial laws, allowing them to dodge regulation. In Texas, the law these businesses operate under was intended for credit-repair companies, not short-term loan lenders, said Rudy Aguilar of the Office of Consumer Credit Commissioner, a state agency that regulates the credit industry. A loophole in that law allows them to charge whatever interest rates and fees they want, he said, and they do not have to be licensed by the state."

To be sure, there are now attempts to rectify the situation, but just as the subprime mortgage loan companiens lobbied Congress, so are Texas legislators facing pressure. There are other states where title loans are outlawed, though, so there is precedent for stopping this practice.

Conclusion

Subprime mortgages aren't the only loans that are causing misery to people these days. Now small towns and working class people who are looking to make ends meet are facing a new scourge.

We're not making excuses for anybody. Personal responsibility, being well informed, and doing the right thing are our motto.

Yet, it's something to think about, if you're down on your luck and are thinking about hawking your car.

As far as the tennis goes, we're still alive and play Monday morning.