Given a Shovel, Americans Dig Deeper Into Debt

MrBill · Expert Joined: Sep 15, 2005 Posts: 5220 Location: Eurasia

Actually, being a fiscal conservative, social liberal, so more of a libertarian, I would prefer no dictatorship. I cannot say I prefer socialism over fascism. I would personally probably do better under a fascist government. So socialism would definitely not be my first or second choice. But whatever, if you have ever seen a true command and control economy in action there is plenty of room for personal enrichment or at least unequal treatment.

I actually quite enjoy tales like this one. I mean she was plenty clever enough to keep leveraging herself into debt. Figuring out how to take second and third mortgages. Smart enough to know how to buy stuff from the shopping channel. Smart enough to know how to sell stuff on eBay. Do I feel sorry for her? Not a bit. My whole life has been about sacrafice. Living debt free. Not buying stuff I could not afford. Paying my own way through university. Working three jobs to make that a reality.

I am actually grateful for this type of behavior. For one her spending on credit makes the economy grow faster than trend. That means I have a job and can earn more money. Secondly, a faster growing economy makes my investments grow more quickly. Thirdly, as I see the economy peaking I go to cash and avoid the fall-out. As I have no debt I cannot be hurt by a falling economy. As I have savings, and she does not, when asset prices fall far enough I can start buying again. Hopefully, properties that were $500.000 for less than $250.000 maybe even $125.000? Used sailboats. Used cars. Vacation property. You name it. Buying it for pennies on the dollar. And all I had to do was avoid the siren's call to spend money I did not have or buy stuff I did not need on credit.

I am young. I am healthy. I do sports and exercise everyday. I eat right. I sleep eight hours a night. I owe no one anything. And although I am generous to friends and strangers alike I have the wisdom to know that I cannot save everyone from making their own mistakes. I can only learn from my own mistakes and try harder next time. I am glad that there is some justice in this world and some consequences for being totally irresponsible. Bankruptcy would be too good for this woman. She deserves to lose everything. Her and all those like her. Unfortunately, as a taxpayer I will probably end up supporting people like her in the end anyway. Oh well, you cannot win them all.
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The organized state is a wonderful invention whereby everyone can live at someone else's expense.

Specop_007 · Expert Joined: Aug 12, 2004 Posts: 6102

Twilight · Expert Joined: Mar 02, 2007 Posts: 2971 Location: UK

Ludi

Specop_007 · Expert Joined: Aug 12, 2004 Posts: 6102

Twilight · Expert Joined: Mar 02, 2007 Posts: 2971 Location: UK

The comparison was with the election of a dictatorship. People want something for nothing, and someone comes along and offers it. Makes them feel really good about themselves. Not everyone will choose it over the competition, but perhaps enough will. There is a catch, but that is years in the future, so why worry? That is the shared psychology that leads people into bad loans and choosing tyranny. The thought process strikes me as remarkably similar.
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"The American people are watching the numbers climb higher and higher at the pump and they're waiting to see what the Congress will do." - George W Bush

Cashmere · Light Sweet Crude Joined: Mar 27, 2008 Posts: 1486

The problem, Cube, with allowing people unfettered access to credit is that I'm differentially taxed for their mistakes.

So it's all well and good for us to propound on the virtues of free will, but what the hell good does it do when the combination of greedy banksters and idiot consumers leads to the economy tanking hard?

I suppose I'm a libertarian as far as that can be done with cruelly limited government.

You want to ride a motorcycle with no helmet? I support your right to do so.

But when they come to the ER and can't be refused treatment and MY healthcare costs go up because he had insufficient insurance, then what?

Then what we have is a system that must fail.

So I'll sum it beautifully with this . . .

The right to individual choice is an option only as long as the economic ramifications of the choices that people make cannot be socialized.

So if my two options are . . .

Give donkey sh-t eaters the right to make very bad decisions and have Cashmere pay for the bad results, or . . .

Take away the rights of those DSEs to make very bad decisions and Cashmere keeps what he earns,

I choose the latter.
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Massive Human Dieoff must occur as a result of Peak Oil. Many more than half will die. It will occur everywhere, including where you live. If you fail to recognize this, then your odds of living move toward the "going to die" group.

nobodypanic · Heavy Crude Joined: Jun 02, 2008 Posts: 348

yes this is all the little guy's fault. those damned 'unwashed' masses got us to this point, not the financiers w/the six figure salaries and the ivy league degrees. Rolling Eyes

bshirt · Heavy Crude Joined: Dec 23, 2006 Posts: 446

jbrovont · Heavy Crude Joined: Jun 16, 2006 Posts: 350

I would like to take this opportunity to revive the "monkey in a monkey trap" analogy. Someone above mentioned easy credit was like legalizing and selling drugs at schools. Like it or not, people are little animals and we have a pleasure center we learn and like to stimulate. It took thousands of years for people to learn to save for winter, and cultivate the land months in advance. If they didn't have self control not to eat all their food in gluttony over the summer it was simple - they died in the winter. Spent all day collecting shiny rocks instead of planting crops? No problem, you starved.

It took what - all of 2 generations of easy go-lucky spending on credit to blow that out the window.

So here we are, technically and socially advanced, with our hand stuck around a banana in a bottle.

People are a dangerous combination of curious, and habitually greedy. They'll try it once just to see. If it feels good, they'll do it again. I'm sorry Mr. War on Drugs Czar, people don't sell drugs - people go looking to BUY drugs. Huge diffference. They cause a chemial reaction of pleasure that people like so they seek them. Alcohol, nicotine, heroin - it's all the same. Prostitutes don't sell sex. No one has to "sell" you on the idea of getting laid. Not unless there's some other good reason not to, like disease, or law, but that's a higher function reasoning. The desire to "get some" is still there. Get real.

We're natural hoarders. I see, I want, I collect. In nature, we'd collect food, tools, cloths and shelter to protect us from the elements. We survived because collecting these things felt "good."

Now our society and technology has outstripped our mental evolution. Collecting "stuff" still feels "good." Depressed people shop because it gives them a "natural high." Collecting "stuff" is pleasurable. Once a person learns that they can have it now, and pay later - look out. They keep poking that pleasure button unless there's an immediate reason not to.

Education plays a huge roll in how people deal with this type of pleasure feedback, but when it comes down to it, for some people they may as well be shooting up or getting laid when they're buying junk or wolfing down 6 big macs. Judging by debt level and the portion of the population that is "obese," I would say most people still exhibit this response.

The knowledge to resist these urges is cultural. The desire to indulge them is deeply rooted in our psyche. Sure we can rationally see that paying $300,000 for a house that's worth $100,000 is probably a bad idea, but without being impressed with that socially and culturally, what do most people do? They buy it. Worse, the idea is twisted and sold to us like it's *better* to pay more for it. Afterall, it's a tax break right? Keep more of your money! It's an investment! It's worth more over time, so the sooner you buy it, the more wealthy you'll be. Oh yeah, and btw - it's your RIGHT to own that house, and drive the car YOU DESERVE!

If you want to see how many (what percent) of the population can resist this, look at the stats for people who are not in debt.

(most) People don't take out loans with the intention of defaulting on them. They do it because at the time they think they can afford it, it's the best thing to do, or for whatever reason they "need" to. By and large, borrowers are not criminal - they haven't learned, or been taught the skills to prosper in their environment.

So who gets to pay for this lack of knowledge / behavioral problem? We do. Can't argue that. Who benefits? Not you or I. We get a handful of inflated paper money. The central banks get all the assets (land, gold, etc.)

This is round 2 in this country, and it looks like yet again, it's going to the big boys by unanimous decision of our unbiased judges in the Fed.