A Country Of Debtors
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David Ignatius has a good article in today’s Washington Post.
In the United States, and to a certain degree in Great Britain and other European countries the societal attitude towards being desperately, deeply in debt has gone from one of shame and humiliation, to an attitude that at these current low interest rates anyone who doesn’t heavily employ financial leverage (i.e. go very deeply in debt) is just plain foolish. So a great many people have stripped most of the equity out of their home through a second mortgage.
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The thought that they might one day actually pay off their house mortgage and have a mortgage burning party seems like just so much science fiction or fantasy. In real life this doesn’t actually happen, thank you very much.
Ignatius quotes Martin Wolf of the Financial times: “U.S. household indebtedness jumped from 50 percent of gross domestic product in 1980 to 100 percent in 2007, while financial sector debt increased from 21 percent of GDP to 116 percent over the same period.”
Need a new mp3 player, or a massive flat screen TV, or a Dolby 5.1 sound system, or a slicker lap top computer, or a sexy new poor-fuel-economy car? Well, just borrow some more money! How sick is it that many people are buying cars on 7 year no-down loans?
It used to be part of the conservative, Christian dogma that debt was evil. Not any more. Now even the highly religious President Bush advises people to go out and spend, spend, spend. And this spending is not coming from saved money, this is borrowed money from credit cards. The very most expensive type of debt.
LINK: http://www.washingtonpost.com/wp-dyn/content/article/2008/10/01/AR2008100102648.html?wpisrc=newsletter
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