Although short selling -- the practice of selling borrowed shares with the hope of repaying the loan by buying back the shares at a lower price -- goes against the American belief that stocks always go up, I have long been fascinated with it. Short Stories discusses what works, what doesn't, and what some of the leading lights in shorting stocks think about its opportunities and threats. I describe possible short trades and seek your comments and questions for story ideas. I don't offer any investment advice and I don't trade on any of the posts I write.

BusinessWeek reports that the consumer is tapped out. Can you profit from the combination of a falling market and a cash-starved consumer?

I was scheduled to appear this morning on CNBC's Squawk Box to discuss ways to profit from problems with consumer finance. Last night, my appearance was canceled -- I think it might have had something to do with the global market crash. But CNBC's loss can be your gain. Here's why I think the consumer will be the next shoe to drop in the economy and a few ways to profit.

• Unemployment rate rising (to 5% in the most recent report)
• Wage growth slower than inflation
• Declining value of homes makes home equity borrowing a non-option
• Savings rate -0.7% -- the worst since 1929
• Consumer installment borrowing at record $2.46 trillion

Pennsylvania may have chased out payday lenders with its new laws. Advance America, Cash Advance Centers (NYSE: AEA) announced that it will close 31 locations in that state, along with 45 Oregon locations, and 27 other underperforming stores. According to a press release announcing the news:

We believe that the decision to close these centers is in the best interest of our stockholders and does not reflect negatively on the financial strength of our overall business model. In Pennsylvania, the uncertain timetable for a ruling on our appeal prompted us to reduce the number of centers there in an effort to control costs. In Oregon, our decision to close our centers is the direct result of a new law that has already prompted most of our competitors to close. Unfortunately, as a result of this new law, consumers will now be left with one less option when they find themselves in need of small amounts of short-term credit. Finally, we have decided to close certain additional centers that have not attained a satisfactory level of performance.

Shares of Advance America lost 9% of their value on Friday and, while payday loans are certainly a terrible idea for consumers, the company may actually have a point: consumers will be left with one less option and, in some cases, a high-interest payday loan is a lot cheaper than a bounced check.