Tuesday, April 7, 2009

Stimulus Maximus

In the late 90’s a good friend of mine used to express his concerns about personal debt in America. As the years rolled by he would, from time to time, share stats about the enormous debt load being accumulated by consumers. A few years ago he stated that personal debt had increased by 300% since 1990. Wages, in real terms, had been increasing only 1% per year over the same period. In other words, we were spending way more than we were making.

Yesterday morning I started reading an audio book called Maxed Out, Hard Times in the Age of Easy Credit by James D. Scurlock. Essentially, according to Scurlock, we live in a debt culture. College debt, consumer debt, second mortgages, loan services, easy credit… From the time we enter adulthood at age eighteen we're not only bombarded with credit cards, but we're also told that our ability to handle debt is a good thing for our credit rating.

A review on Amazon.com included this statement about the book. "This engaging narrative presents numerous stories about easy credit given to students, the poor, the weak and the uninformed, whose lives are ruined by their debt burden, including some cases of suicide." I knew a woman whose father committed suicide because of his debts. He was not one of the poor, weak or uninformed mentioned here. Just another casualty along the American way.

It's funny how pawn shops have grown in importance in our country. I don't ever recall seeing a pawn shop when I was a kid, though I am sure they existed because someone had to be a fence for stolen goods, right? Now, pawn shops are a part of any urban landscape, taking advantage of desperate people by offering cash at ten cents on the dollar for what is often a prized possession.

Debt consolidation services, encouragements to fix everything with a second mortgage, all these tools exist to stay above the waves, or as Scurlock puts it, to surf a wave of debt.

Not mentioned yet in the book, but of concern to me, is that our country now exports these ideas which lead to enslavement of new candidates for borrowed money. We have mutual funds which actually head into the Third World offering help to the poor by loaning money, then charging exorbitant interest. These people have no experience with all that fine print. They only see the cash and the ability to stave off hunger for their little ones. It's an ugly business.

Returning to the review on Amazon: "In recounting the history of credit cards and the effort to sell credit as a lifestyle, the author claims that credit given to those who do not have the ability to repay it is entrapment. His is an urgent call to arms in the way we think about debt; he blames financial institutions and a seemingly powerless Congress that during the past 30 years has allowed bankers to make the rules on extending credit. While not everyone will agree with Scurlock, this is a valuable perspective for library patrons in our materialistic, debt-ridden society and provides excellent education on an important topic."

If one thinks excessive debt is a problem for individual, one has to wonder what current stimulus package is going to do to our country. A lot of people think the government can bail us out of anything, and why not a debt crisis? Haven't they always bailed us out before?

Well, here is an article from the most reason Reason magazine in which a group of economists have weighed in on what ultimately passed as legislation designed purportedly to stimulate our economy. Here's the online version of the piece, which I recommend to you, called The Reason.com Stimulus Symposium in which a panel of leading economists sound off on the $800 billion stimulus package.

So it seems our government leaders are cut from the same piece of cloth as ourselves. We keep telling ourselves that if only we had just a little more money we can fix everything. What do you think? Read 'em and weep? Seems like sooner or later someone always has to pay. Looks like the Boomer legacy might be to leave that problem to their children.

1 comment:

LEWagner said...

That debt problem is a hard one to solve. I think that a good beginning would be to start spending more money in the right directions, and less in the wrong directions.
I think the US needs way more tax cuts for large corporations and the richest 2-3 percent of individuals. Way more money should be spent on space-aged weapons and on aggressive shock-and-awe type warfare in all corners of the world -- and way less money should be spent on social programs to educate and feed the poor in the US itself.
Down with socialistic handouts, and up with Arbeit Macht Frei! Tough love!!
The government should spend NOTHING on scientific research which is clearly propagandist, but should leave independent research up to the oil companies, drug companies, and other corporations. They for SURE will act in the public interest in announcing their research results via shiny-paper full-color booklets.
Public-interest research done by corporations won't cost the taxpayer a dime in taxes, OR in added-on costs to manufactured products and drugs.
He (the taxpayer) will be able to get the true research results right from the corporate mouth, so to speak -- in living technicolor, with lots of high-res pictures, crammed into his mailbox, demanding to be read!
DOWN with government-funded research disseminated in shoddily-printed black-and-white, at $2 a copy for anyone who cares to order one. It costs too darned much! (There are documented cases from back in the pre-Reagan days, when the socialistic-minded government actually printed a few thousand more copies of their research results than they could sell, and barely broke even on the sales.)
Much MORE should be spent on buying newer and higher-powered cars for the regular army of local inspectors charged with enforcing a total prohibition of commerce, in every nook and cranny of areas not zoned for such. Anyone who would buy and sell in their traditional neighborhood without paying several thousand dollars for a zoning variance first, is by very definition, a *law-breaker*. That sort of person is more worthy of a heavy fine or prison sentence, than of any economic freedom.
Actually, keeping a constant eye on these kind of people costs more than it's worth! Lock 'em up where they don't need to be watched anymore, and hire some more heavily-armed prison guards to make sure they stay there! America should NEVER be afraid to spend more money to keep itself free!
NOTHING needs to be spent on enforcing any ethics laws on humongous corporations, mega-farms, or banking institutions, who in a truly free market system, will surely honestly regulate themselves -- with no cost to the taxpayer whatsoever.

If -- and I know, "if" is a BIG word, but I WILL dare to hope -- IF ALL of the above by some miracle takes place, it will surely lead America back to fiscal responsibility, and to "standing tall again", faster than you can say "Jack Robinson!"
(sarcasm)

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