I know I shouldn't have done it, but I did. It was just laying there, and I happened to glance down, and it happened to catch my eye.... an article in the Oregonian last week titled, "Consumers' finances OK despite debt, Fed chief says." Here is a snippet: |
"U.S. households' finances are generally in good shape even though consumers have built mountains of debt, and bankruptcy filings have surged, Federal Reserve Chairman Alan Greenspan said Monday.
Decades of low interest rates and extra cash from refinancing have given people flexibility to better manage their debt, the Fed chief said in a speech to a credit union conference....
Consumer debt hit a record $2 TRILLION in December, according to the most recent figures of the Federal Reserve. That debt includes credit cards and car loans, BUT NOT MORTGAGES."
OK. Let's see here - is he fucking crazy?!?! Do people really believe this? Here are my (rambling) thoughts on the subject:
The consumer-driven culture that we live in has fucked people up financially and emotionally, enticing them to spend, spend, spend to feel better about themselves. When you can't spend no more - get a credit card! It's been my experience that people generally get credit cards b/c they feel it will give them more "freedom." So, they get a card, or two, or three, and build up mountains of credit card debt filling their lives with useless crap. One day, they wake up and realize they are in deep shit b/c their credit card payments are piling up faster than they can pay them. So, they work longer hours to pay off the crap they didn't need in the first place and find they really don't have any "freedom" b/c they are too busy working their asses off. But that's OK according to Al.
Because then you can just refinance your....HOUSE to pay off your debt. What a fucking brilliant plan. For too many of these people who have gotten this far, I really feel for those who have actually lost their houses. Some may get "lucky" and declare bankruptcy to avoid losing their home; but the government now wants to make it harder for ordinary folks to file for bankruptcy, in part because of pressure from the credit card companies, who are losing money from people defaulting on their payments. These companies literally prey on people, especially students, by pretending that having a credit card is so easy, and will give you so much "freedom," that you'd be silly not to have one. So, it's no surprise that so many people default on their payments.
I myself am still paying off only $1,000 in credit card debt from college. I went to Penn State. When I graduated 2 years ago, we were about to build the "MBNA Student Center" (for those of you who don't know, they are a large credit card company associated, I think, with MasterCard). For an article in my senior journalism class, I decided to write about the corporatization of my campus and colleges in general. I asked the provost about this new student center: "Isn't it wrong to have MBNA on campus when so many college students find themselves in mountains of credit card debt when they get out of school?" or something to that effect. He replied that it was OK because they were a "responsible company" and had resources available to show students how to manage their debt - which is of course, something you have to learn eventually. (Try telling a frat boy about "proper debt management" when he is buying 4 kegs a weekend on his credit card.)
As if this isn't enough, I recently received a letter from my alma mater (damn, they found me!) nicely informing me that I can get an MBNA credit card at a very low rate to pay off my student loans! Thank you, Alan Greenspan.
Here is the link to Alan's full speech to the Credit Union National Association: http://www.federalreserve.gov/boarddocs/speeches/2004/20040223/default.htm