Everybody’s Business - Deep in Debt, and Now Deep in Worry - NYTimes.com.
How many of these stories are we going to be forced to read? Yet another "Americans have acted like spoiled brats ad spent insane amounts of money they didn't have and now they have to grow up!" These stories started appearing a decade ago when Americans' saving rate went negative for the first time. In recent months, there has been a dramatic increase in finger pointing and tut tutting from the "adults" among us.
I'm sure some Americans have spent foolishly, but most Americans are in debt because their real wealth has been decreasing even as more and more consumer credit was offered to them. The truth is that most of us are in debt NOT because we have $12,000 a month mortgages or because we have refused to act like grown-ups, but because most Americans have had a lot less money and higher costs of living, including the cost of paying interest on our debt.
You don't have to be an economist to figure out what happened. It's quite simple, really. First, jobs that paid a reasonable wage- jobs in manufacturing, for instance- went the way of typewriters and we were faced with McJobs, low-paying service sector jobs that left us unable to pay the rent. Which leads me to two: housing costs skyrocketed and we had to spend more and more of our low wages on them. Three, medical costs skyrocketed. Four, the cost of higher education skyrocketed and the federal government decreased educational funding dramatically. Five, all of this was disguised by women entering the labor force in record numbers (so household income went up) and the aggressive marketing of consumer credit to everyone who could sign on the dotted line.
To make the increasing gap between the rich and the rest of us even more extreme, the interest we paid on our borrowed money was inversely related to our wealth. In other words. the poorer you are, the higher your interest rate. Whether it was a maxed out credit card at 30% or a subprime mortgage in an impoverished neighborhood with a ballooning interest rate, the poorest among us paid the most.
And now we're supposed to endure lectures from the ruling class? Enough blaming average Americans, who work more than any other people in the world. Let's blame the people who are really at fault: the rich. In the past three decades, greed and avarice meant the rich got way richer and the rest of us used debt to try to get by.
Lectures from the haves to the indebted among us will not solve the problem. Hopefully we'll see increased regulation and redistribution of wealth to make America more like the country it was from 1945-1980, a country where everyone was becoming better off, but the rich were not so much better off. And if that does't work, then we'll have to do what the people have always done when the rich have exploited them into a corner: draw and quarter them with our maxed out credit cards.