With the housing crisis and less-than-robust economy making paupers out of people who thought they were living the American Dream a few years ago, investors are looking for ways to capitalize. Yesterday, I wrote about the strong business that self-storage companies are doing housing the belongings of former homeowners.

Today's Heard on the Street column (subscription required) in the Wall Street Journal looks at another obvious beneficiary of other people's misfortune: pawn shops and payday lenders. Shares of companies like First Cash Financial Services (NASDAQ: FCFS) and EZCORP (NASDAQ: EZPW) have run up nicely in recent years but have since pulled back as times have gotten tighter. Some analysts blame the aggressive expansion of pawn shops into payday loans, which lack any form of collateral.

"The earnings strength of payday loans is untested in a tough economic environment, when borrowers who lose their jobs default on the loans," according to The Journal. "And the business has come under increasing fire from state legislatures and consumer groups, which contend that the fees on these uncollateralized loans often amount to interest rates of as much as 400% a year."

The contradiction here is remarkable, and the Journal doesn't point it out: investors are worried that payday lenders are running the risk of defaults high enough to wipe out the profits from high-interest loans. Meanwhile regulators and consumer groups are accusing the companies of charging outrageous interest rates. But which is it? If the high "interest" on the loans isn't enough to overcome defaults, then the interest rates aren't high enough! Perhaps this explains why none of the big banks offer payday loans.

The Wall Street Journal [subscription required] suggests that the 70% of economic growth that's driven by consumer spending is shifting into reverse. High, middle, and low income consumers are cutting back their spending. Lower and middle income consumers are selling their gold and using pawnshops to pay their bills as food and energy prices hit record levels. Investors should consider whether to sell their stocks or hold on and suffer.

High income consumers hit. Companies that serve higher income consumers are losing altitude, including:

• Tiffany & Co. (NYSE: TIF) said that its U.S. sales slumped during the holiday period.
• American Express Co. (NYSE: AXP) warned of rising delinquencies and slowing spending among its cardholders.

Lower and middle income spending down. Less surprisingly, retailers to lower and middle income people are also suffering. These include: