Marketers. Don't forget the marketers.

While all of these people who "helped" people get into debt do deserve some blame, the ones who got themselves into it, knowingly, because they just couldn't wait to get that new toy, deserve to be blamed too.

I'm sorry, but I don't feel sorry for people who purposely overspend on non-essential items.

The column is typically disingenious and dishonest. You throw a list and everyone is to blame equally. Lotteries are not the problem. Quick pay lenders are a small amount of the problem and often do some good. The generic Congress is not the problem- it was a Republican Congress and President who cut taxes while going to war while enabling credit card companies and their shennigans. On and on.

I have this revolutionary spending plan: Don't spend money you don't have.

If only the Republican Party "Al" shills for felt the same way.

Anybody know where we can get a PDF of the report Brooks' cites? It seems that the Institute for American Values is charging $7 for it. Not the best way to get ideas out, is it?

I wonder if Al has ever had a mortgage.

The argument could focus on families and credit problems, but I suspect Brooks was focusing more on the federal government spending and debt.

The policy of the Conservative Republican Bush administration has been to place America in so much debt that it could "be drown in a bathtub". Why? What would Republicans have to gain from such nonsensical behavior?

They don't want government to do anything to interfere with the "haves and have mores".

Democrats have an agenda which will help all of America and Republicans (and their haves) don't want us taxing them to do it. So, they put us in debt to the point where the obvious (and I emphasize OBVIOUS) thing to do is to pay down debt the way any family would.

But, the U.S. government is NOT a 'typical family'.

The government needs to behave a bit more like a corporation in this matter. We have structural problems which need fixed for the long-term national security to be ensured. We have to spend money to improve our military's national defense posture. We have to spend money to fix the devastated areas along the Gulf Coast (if they haven't been fixed already). We have to spend money to bring more competition to the energy market and free us of significant dependence on foreign oil. We have to work towards a day where we pollute less. We have to help out corporations (see Bear Stearns) and families (see millions with no name on the front page of the NYT) who are going bankrupt because of unforseen economic problems.

We have to fix problems, not let them linger.

Brooks advocates paying down the debt. But, that prevents us from fixing problems which could swamp us. Which is more important? This presidential election will, to some extent, hinge on that question.

Today Republicans voted to kill a windfall profits tax on the oil industry. Apparently they'd prefer to let the broken arm hang by the skin rather than fixing it. They'd rather let our ports go unguarded. They'd rather let us all strangle on carbon in the air. They'd rather do nothing and let America drown in the bathtub.

I dissent.

Every so often, even a blind nut can find a squirrel.

David Brooks has spent the last several years proclaiming support for many of the economic concepts that have brought us to this point. I remember a few years ago hearing him state on NPR that those who were saying the economy was headed for trouble were nuts because people were spending more and more, even as their income was stagnant or retreating. This ignored the very obvious fact that people were spending their savings and/or home equity, taking on more and more debt. Typically, NPR milquetoast "liberal" EJ Dionne let Brooks get away with this stupid "analysis."

So, unless Brooks also blames HIMSELF, there is nothing about his column that is worthwhile.

When are you going to get a clue, Kevin? Why do you insist on perpetuating the delusion that people like Brooks or Sullivan have any intellectual skills beyond the rhetorical?

weenie: I'm sorry, but I don't feel sorry for people who purposely overspend on non-essential items.

What about people who are pressured into buying expensive shoes for their friends? No sympathy at all?

Hey - I thought we weren't due to outlaw gambling as a vice until about 2045 or so. It seems to go in 75 year cycles, pretty much one lifetime.

Brooks is getting ahead of himself. And who should we believe - Brooks or Bush who said the best way to fight terrorism was to go out and shop?

Um, Al, most people who have kids they can't afford didn't plan to have kids. Usually they can't afford birth control, either. Plus, you Republicans want to outlaw that as well.

So, what you are really saying, is don't have sex unless you can afford to have kids. Good luck with that one.

*

optical, you missed the point. the world has become a financial trap for those living on the financial edge. i'm not talking about those relatively well off who are living beyond their means but those who are struggling to get by. it's a rare week when i don't get two or three credit card apps, plus offerings for lines of credit etc. tell me who's irresponsible: the bank that puts a credit card in the hands of an 18 year old or the 18 year old himself? read the marketing for home equity loans. they're a fine financial tool, a good source of cash if used wisely. but watch how banks market them as a way to pay for vacations and luxury goods.

the payday loan industry was built by preying on the poor. states market their lotteries hard on tv, on radio, billboards in newspapers. it's glamorous and fun. and the proceeds go to a good cause, like education or aid to senior citizens.

it's all easy money, they tell us. and of course it's all a lie. but if you're desperate enough, naive enough you might see them as your only alternative. and the culture generally makes all of this quite respectable.

mhr: Lyndon Johnson's liberal War on Poverty was a disastrous failure
Yep. I remember all those homeless people living in the street in the late 60's and 70's. In the Regan years there weren't any homeless people at all, were there?

Hey, it's been that way since the beginning of the republic when the rich planters and merchants borrowed five million from the French to finance their tax revolt against the British and then imposed the Whiskey Tax on the poor Scot/Irish hill farmers to repay the debt. Taxing the small producers at a higher rate per unit than the larger producers.

It's been that way since hunter/gathers settled down to agricultural pursuits and the surplus they produced enabled the creation of an aristocracy, and armies and craftpersons to produce weapons to defend and increase the wealth of the aristocracy.

Brooks sounds like a Victorian scold blaming the poor for being lousy money managers. Real incomes haven't risen in this country in almost a decade. Minimum wage is a joke. It is a canard to point to the debtor and imagine that they got that way by buying luxury items. Most bankruptcies are caused by medical bills. Students carrying debt are doing so to finance their educations. It's time to wake up and realize that income inequality isn't the fault of those at the bottom and start making fundamental changes in the way this economy is structured. Boo Brooks, and I'm sorry to say, boo Kevin for cheering him on.

Brooks sounds like a Victorian scold blaming the poor for being lousy money managers. Real incomes haven't risen in this country in almost a decade. Minimum wage is a joke. It is a canard to point to the debtor and imagine that they got that way by buying luxury items. Most bankruptcies are caused by medical bills. Students carrying debt are doing so to finance their educations. It's time to wake up and realize that income inequality isn't the fault of those at the bottom and start making fundamental changes in the way this economy is structured. Boo Brooks, and I'm sorry to say, boo Kevin for cheering him on.

Naming names? I didn't see the name of Ronal Reagan in there. Who else is more responsible for starting trends that have made large segment of middle and lower classes so much financially vulnerable?

I agree with a lot of what Brooks said, but I'd like to make a few qualifications. First, unless there's evidence that a large number of people are buying several hundred dollars worth of lottery tickets each week, I don't see what that has to do with anything. Even if it is a waste of money, I haven't seen any evidence that a significant number of people spend enough money each week for it to make a difference. Second, while credit card companies are a somewhat duplicitous bunch, they don't appear to be doing anything illegal or even overtly unethical. A lot of people make dumb mistakes, like I did once with a cash advance with an absurd interest rate, because they don't know any better. The shady tactics to get them to sign up and keep spending do have a very big effect on the problem, but if people, particularly the young and/or in college, had better financial literacy, I'd guess that there would be fewer issues. Finally, while some of the pay packages seem outrageous in many ways, I am not sure what that has to do with a culture of debt. I'd bet that these guys would get ridiculous compensation regardless of the state of the economy. We have reasoned to be concerned, I think, but not because of its effect on levels of debt.

Mudwall,
I said non-essential items.

Thersites,
I did say that flip flops would be fine.

Don't forget the media, including folks like Brooks, who fail to adequately (if at all) inform the public of all the games being played by the politicians, banks, marketers, etc.

Count me among those reluctant to rehabilitate Right Wing blowhards who occasionally say something sensible (or at least start to be more reasonable when the handwriting is on the wall that they are going to lose power).

weenie: I did say that flip flops would be fine.

So you've changed your mind, and become a McSham supporter?

Why do you insist on perpetuating the delusion that people like Brooks or Sullivan have any intellectual honesty

Fixed it for you.

Years ago, James Grant wrote a book ("Money of the Mind") decrying the expansion of credit, and arguing that it led to about everything bad you could think of. I see something of that in Brooks' argument as well.

There's something profoundly regressive, however, about the attitude that access to credit is good for people "like us" and bad for people "like them"--lower income, less education...

Expansion of credit has led to much good, and some bad, in this country. (You get to decide for yourselves whether the following are among the good, or the bad, things.) It's led to a majority of people being homeowners. It's made possible widespread (close to universal) automobile ownership. It's enabled an increasing fraction of the population access to post-secondary education.

And it is also the case that too ease acceptance of debt and of speculation (as Keynes pointed out 70+ years ago: "Speculators may do no harm as bubbles on a steady stream of enterprise. But the position is serious when enterprise becomes the bubble on a whirlpool of speculation. When the capital development of a country becomes a by-product of the activities of a casino, the job is likely to be ill-done. The measure of success attained by Wall Street, regarded as an institution of which the proper social purpose is to direct new investment into the most profitable channels in terms of future yield, cannot be claimed as one of the outstanding triumphs of laissez-faire capitalism….") is no way for a society to prosper in the long-run.

But I fear that Brooks is being a grinch here, and that his solutions will be profoundly harmful to lower-income families, and to governments trying to make provision for the future (especially in terms of infrastructure investments).

Thersites,
You trying to start a fight?

Just remember, I have an inside connection to the whirling paws of death. Dog!

Sorry, Brooks lost his credibility when he called Microsoft a "socially useful product."

There seems to be a lot of debate here about whether the creditcard companies, etc. are irresponsible or the people who abuse their products are. Is this really an either/or? Seems to me like it's a "both."

And as weird as it seems to me, I actually sort of agree with Al. Spend within your means (and I'm talking you, too, Republican party...), and don't have kids you can't afford to take care of. As for those who "can't afford birth control," condoms are pretty damn cheap. A lot cheaper than cigarettes or armloads of lottery tickets. And a lot of cities' health departments literally give them away, as do most free or low-cost clinics.

Would it kill the Democrats to acknowledge that, while the companies who offer these fast-cash programs are scumbags, there are plenty of irresponsible individuals out there too? I think we'd have a lot more credibility as a party if we stopped infantilizing the poor, acting as is they are totally incapable of making responsible decisions.

I fear that [Brooks'] solutions will be profoundly harmful to lower-income families, and to governments trying to make provision for the future

I'm shocked! Shocked! To learn that Brooks' milquetoast mumblings mask a hardcore conservative agenda!

The poor paying for the rich? No, say it ain't so!

Debt is a promise to deliver hours producing over a future period. How many hours have you promised to work?

When we aggregate and demand long term payments far out into the future, we can only do that if we find some poor people to enslave.

Would it kill the Democrats to acknowledge that, while the companies who offer these fast-cash programs are scumbags, there are plenty of irresponsible individuals out there too?

Um, they do. But I thought the magical marketplace was supposed to prevent risky loans to such individuals -- unless, of course, a government bailout protects corporations from risk. So much for moral hazard -- the current subprime mess is a crystal-clear example of what happens when corporations see a profit motive in lending to anyone and their dog (Santa's Little Helper, of course...)

Laws like the reprehensible bankruptcy bill are not about holding "irresponsible individuals" accountable and all about protecting the asses -- er, assets -- of the irresponsible corporations who lent the money in the first place.

I don’t agree with everything Brooksy says, Kevin. For example, taxing consumption rather than income, as this rich prick proposes, punishes the poor and middle class. But it is hard to argue with the notion that everyone could stand to be a little more frugal. I guess the GOP is belatedly realizing that Gordon Gecko’s admonition that “greed is good� was total horsesh1t! Don’t look now, but even John McCain is pretending he is a populist by criticizing executive pay.

I read the article in the hope that Brooks would link the rise of the conservative movement and its policies which concentrate wealth to the problems which he sets forth. But he concludes by blaming the victim, what a surprise!

Brooks' column is at least seven years too late.

Gregory: Show me ONE Democratic official who, during the subprime mess, has said anything to the effect of, "While these companies are shameless and sleazy, the fact is that lot of people shouldn't have taken out these loans in the first place." Believe me, I would welcome anything you could provide on that front.

That companies who prey on lower-income people are scum is obvious. But no one puts a gun to anyone's head and forces them to accept these terms -- especially in the case of mortgages. Everybody needs a place to live, but nobody NEEDS home ownership.

For the poster unable to type "Who buys lottery tickets" into his web browser, I did it for him and grabbed the first entry.

http://www.tucsoncitizen.com/daily/local/8477.php

Arizona Lottery sales in metro Tucson are highest in areas where residents can least afford to play.
Households in the Tucson area's lower-income ZIP codes spent an average of $177 for lottery tickets last fiscal year, $35 more on average than households in upper-income ZIP codes, according to a Tucson Citizen analysis of figures from the Arizona Lottery Commission.

Okay, here is the weirdest thing I've ever used my calculator for. If the people spending $177 on lottery tickets spent it on condoms instead, they could have sex virtually without fear of pregnancy 424.8 times a year (okay, that .8 time might be less than satisfying...). That's based on the $9 plus tax figure for a 24-pack of condoms, which I looked up on drugstore.com, where prices are pretty similar to your average pharmacy. Add to that the free condoms from health agencies and clinics, and you're looking at a pretty good year!

Those poor people who purchased subprime mortgages paid their real estate and mortgage brokers very well for the terrible advice they received. Not one of those well paid 'experts' told any of their less informed clients the mortgages they were taking out were bad deals. When poor or less informed people questioned the terms or prices of the mortgages they were purchasing, the well paid 'experts' assured them all they would have to do is refinance with the increased equity they would have within a year.

You know what's a good way to be "informed"? Read your contract. If you don't understand it, pay an attorney for an hour or two of time to read it and explain it to you. If you can't afford that, you probably shouldn't be buying a house.

Well, let me be one person to disagree. This agreeable melodramatic scenario that Americans are wasteful lazy bums is a fiction. Americans work harder now than they ever have. They do not live more extravagantly than people in other western countries. The difference between most of the european middle class and the American middle class--when it comes to expenditures--is that the european governments pick up more of the tab. So that while American consumers have gone into debt over the last decade (because incomes did not rise enough to maintain their lifestyle, btw--not to fund some sudden burst of extravagance) in Europe it was the governments which went on a borrowing spree. This might make individual Europeans feel superior in some ways, but the difference between borrowing money yourself to subsidize your "lifestyle" or having your government borrow it to subsidize your "lifestyle" is what, exactly? Yes, even after the wildly imprudent deficit spending of the Bush years, when you compare the total debt as a percentage of GDP, you arrive at a figure for the USA that is less than that of every major European state. Even the legendarily prudent Germans have a higher debt load than us when compared to the scale of their economy.

...Payday lenders have also played a role. They seductively offer fast cash — at absurd interest rates — to 15 million people every month.

Right. People going to payday lenders. Brooks is such an idiot and so out of touch. People using payday lenders can't even get credit cards. Some people are using these loan sharks for food and rent money. Hardly the same thing as people in the middle- and lower-middle income brackets using what home equity they had as an ATM for shit like Harleys, jet skis, vacations, plasma TVs, etc., etc.

But, but these are Repugs greatest constituency, and Brookie didn't mention housing shark loans that McCain is all FOR.

Even right now Obama is sitting McCain up, Obama WANT to give more TAX REBATE checks - and then McSame McBush screams it's bad for business - especially Bush's unbid contractors.

Oh AND Repugs just voted down the Big Oil Windfall Tax. Yep, I sure the voters know EXACTLY where McBush II is coming from. I can't wait for some of those townhall meeting/debates. When McBushie II's ONLY money comes from people that like to collect millions with unbid contracts and not pay ANY tax.

Obama's economic policy plan is putting money back in the working-class pocked - McCain has to doll out to his campaign supporters - Big Business.

The whole column is a Trojan horse for this, in the penultimate graf:

"The tax code should tax consumption, not income . . ."

$9 for a 24 pack of condoms!?! I'm obviously not shopping at the right drug store...

Me-again,
Calm down and maybe some of us could understand what you are trying to type.

Note the timing. Now that the Republicans will soon be unable to run up huge deficits while showering cash on their supporters, it's time to talk about frugal government and responsible budgeting. Maybe even paying down the debt. Deficits don't matter when Republicans are in charge; it is their due. As the beneficiaries change, so do the rules.

Whoever mentioned the pushers of home equity loans was right on target. There are so many shady outfits that, during the housing bubble, grossly over-valued homes and offered the homeowners ridiculous amounts of money - and then the bubble burst, leaving the suckers who applied for the loans very upside-down. I was one of those suckers, and now I have to short-sell my house because I can't afford to pay the home equity loan (I was moved to a job that paid less, so while I could afford the loan when I got it, I can't anymore). And the shady dealer who gave me the loan is out of business, due to complaints from other people who were swindled.

I doubt that I'd end up agreeing with Brooks 100% about how to address this problem, but this isn't a bad start.

Yes, it is. It blames what should be blamed on deliberate abusive lending practices enabled and encouraged by a variety of laws, particularly at the federal level, instead on factors which it paints as cultural. Instead of blaming federal laws which neutralized any impact of state usury laws for the resulting abusive interest rates, we instead blame the lenders for acting to maximize profits within the law while ignoring the social costs (which, as for-profit, often publicly traded, corporations, they are virtually obligated to do) and we blame Congress and the White House not for the laws which directly enable and encourage the behavior (nor for the tax and other policy of this Administration that has guaranteed that even during the years of strong aggregate growth, the bottom four quartiles have done worse, meaning less people are able to "live within their means") but instead for borrowing themselves.

The problem isn't with "social norms", or "culture", or anything like that. It is with government policy deliberately, consciously designed to reward the rich at the expense of everyone else. And Brooks column pining for America's "Puritan legacy" is a distraction,
almost certainly a conscious, deliberate distraction, from that.

Don't forget Alan Greenspan. He cautioned Bush about the danger of paying down the national debt, and then praised the creative financing instruments that allowed people to harvest their home equity. Reading too much Ayn Rand when you are young is no excuse.

My parents were able to build a nice nest egg (which is funding their stay in assisted living simply by putting away money and letting it accrue interest in a savings and loan. Can't do that today - interest rates on savings are only about 1 to 2%. So, if a young couple started saving money this way today, their savings in 50 years would not be sufficient, wouldn't even keep up with inflation. That's the downside to low interest rates.

Part of it can be traced to the fact that:

a) many people graduate high school unable to do basic math

b) people do not receive any financial education in either high school or college

c) most kids do not have piggy banks anymore and are not taught to save money

The problem isn't with "social norms", or "culture", or anything like that. It is with government policy deliberately, consciously designed to reward the rich at the expense of everyone else. And Brooks column ... is a distraction, almost certainly a conscious, deliberate distraction, from that.

Posted by: cmdicely

Perfect.

mfw13: most kids do not have piggy banks anymore

Of course not. My kids save money in their dinosaur banks - way cooler.

"Real incomes haven't risen in this country in almost a decade."

Apart from a slight rise in the 1990s, they've been stagnant since the 1970s. And while some things are cheaper (e.g. some consumer goods--many non-essentials), other things are much more expensive (e.g. college, housing).

The main problem is policy-driven, and can be fixed by policy (though I don't know if it ever will be).

.8 of a time is better than nothing, I always say.

We praised business titans like Buffett constantly for their "shrewdness" while our dead soldiers merited a couple seconds each on This Week.

We taught mathematics and reading in our schools but vanishingly little regarding the moral ends towards which those two tools should be used.

We assured each other of the importance of decency and humanity in our conduct towards other living things. Then we invited - indeed, encouraged! - cruel factory-farming sadists to do their worst.

We built a system of little factories in our living rooms with the television viewer as laborer, the viewing of advertising as labor, and consumption-encouraging programming as wages. (hat tip to modern genius Sut Jhally).

We valued "hard work" as if it were a good unto itself... even though I'm quite confident that Pol Pot, Stalin, and a bunch of other peachy-keen role models were extraordinarily hard workers.

Then, after all this... after we DESIGNED INTENTIONALLY a populace obese on the anti-ethics of Deal-or-No-Deal... people like David Brooks and Kevin Drum wonder why said populace goes into irresponsible debt to finance the lifestyle to which they've been taught to aspire.

My goodness, what a fraud. And what an argument for some variant of democratic socialism.

Writing a column about how middle class people need to save more and then promoting a consumption tax is the stupidist think I've ever heard. (Or is very stupid. Perhaps I HAVE heard stupider things, like privatizing Social Security.)

A consumption tax would help those who do not need to spend all their income (the rich) at the expense of those who are living paycheck to paycheck to pay for the essentials (the working poor and the lower middle class).

As for credit, put the blame where it belongs, on deregulating banks and allowing them to charge whatever they want for credit cards, and on the FED for lowering the interest rates to the point where savings produces less than increases in the cost of living, making savings a LOSING prospect.

Last I looked, these were foundations of the Republican't Party.

I have this revolutionary spending plan: Don't spend money you don't have

A damn shame Al didn't send this idea to the boy king and his rubber stamp bootlicking rethug congress.

Yes, it is. It blames what should be blamed on deliberate abusive lending practices...instead on factors which it paints as cultural. Instead of blaming federal laws...instead blame the lenders for acting to maximize profits...blame Congress and the White House...The problem...government policy deliberately, consciously designed to reward the rich at the expense of everyone else...
Posted by: cmdicely

Near as I can tell no one is forcing someone to borrow and spend money they don't have. Ultimately it is the borrower who signs their name on the dotted line who must bear the blame. I mean...$%#-ing duh.

OT:

http://www.sportsline.com/nba/story/10860844

Would any of you crack analysts over here want to offer up some more esoteric theories about the NBA home/win advantage?

Two words: Occam's Razor.

Two more: NBA = WWF

Bill Gates has yet to build anything. And there is more than a little debate about the social usefullness of those things he appropriated.

Brooks writes: "The people who created this country built a moral structure around money. The Puritan legacy inhibited luxury and self-indulgence. Benjamin Franklin spread a practical gospel that emphasized hard work, temperance and frugality."

Uh, David, ever heard of the Virginia Colony, which wasn't Puritan?

The federal government leads the way. Lookee how much the King of Spenders is wasting on Iraq.

On the bright side, a collapse of the dollar will enable us to pay off debts with inflated money.

What's with the McCain banner ads in heavy rotation here and at TPM?

SoCalAnon: there is more than a little debate about the social usefulness of those things [Gates] appropriated.

I don't know. I've bonded with many new friends commiserating about Windows. Then my new friends and I kick sand in the face of Mac users, because Windows has made us tough.

Near as I can tell no one is forcing someone to borrow and spend money they don't have. Ultimately it is the borrower who signs their name on the dotted line who must bear the blame. I mean...$%#-ing duh. -RJSM

Ok, this is the crux of the controversy, thanks for posting that. Somebody posted this truism somewhere and I don't know who to attribute it to, but this is the quote:

"The Demand for loans (good or bad) is unlimited, it is the supply part that is the problem."

Well, the supply watchdogs were asleep at the wheel and should be in the dock over this. Those watchdogs are the gatekeepers if you will that have a very profound impact on the rest of our economy with their lending behavior-especially the prudent Puritan savers that Brooks talks about. If you essentially allow nearly anybody to borrow nearly anything they want to borrow, you clearly aren't going to have a shortage of borrowers. Come one, come all! Don't complain about the varmint population and the resultant rabies in town if you vote to disable the activities of the animal control department.

What Doc said.
Meth users make bad individual choices, too. But we still arrest the dealers, don't we?

"Bill Gates built a marginally useful product and then used network effects, product tying and monopolistic business practices, unchecked and unpunished by this administration, to kill competitors and help pull in 99+% profit margins from consumers with few options to make his fortune, ."

There, fixed that for David Brooks.

It's not just that Brooks is wrong as he usually is. It's that this is just his pious, GOP is losing so it's time to take the moral high road flavor of the month. If McCain should win, Brooks will favor debt and more debt. Within the context of just this column, he's somewhat right, but overall he's full of it. It's like the kid who shot his parents asking for mercy because he's an orphan.

I'm at a loss here. This is all stuff we've known about for years. What's the point ?

What Brooks fails to mention is that the market for all these predatory debt products was created by the decline in real terms of the wages of working people (including the middle class) over the past couple decades.

When people can't make ends meet, they must borrow.

And the Republicans whom Brooks supports have been adamant in rejecting any controls on predatory lending.

The system is rigged in favor of debt-slavery. Brooks would like to palm it off on a decline in moral fiber among the hoi polloi, but it just ain't so.

I have this revolutionary spending plan: Don't spend money you don't have. - Al (first post in this thread deleted by moderator but referenced several times.)

Not everyone needs to buy a house. Wasn't a paid-for house the gateway to the 'middle class' in that long ago time before Reagan? Didn't he lay the ground work for the idea that every American can own his/her own home with the reduction of capital gains taxes? Didn't the TV convince you that you needed to have more things and more expensive ones at that? Credit is the great enabler and the banks are the dealers. Almost everyone is hooked on credit.

If you never apply for credit, but live week-to-week within your means and keep your expectations realistic, you can choose whether or not to answer the telephone with few repercussions. However, credit addicts will need to stay in touch if they want to keep their dealers happy.

All those items listed by Brooks are logical outcomes of the economic and political system he otherwise admires.

"It's a worthwhile column to read."

False.

Sometimes I think Kevin Drum graduated from the Matt Miller school of gullible "centrist" punditry.

The US government has banned essential vaccines and drugs based on scientifically dubious assumptions, ditto embryonic stemcell research, ditto pot, Cuban cigars, raw milk French cheese, etc. Those were deemed too scary for the average consumer. Yet somehow it's okay for ARM/CC/Payday loansharks to roam around, even though the products they peddle are much more detrimental and far less likely to provide enduring benefits to their consumers.

But instead of talking about that, let's talk about the latest Brooksian strawman.

SJRSM,

Near as I can tell no one is forcing someone to borrow and spend money they don't have. Ultimately it is the borrower who signs their name on the dotted line who must bear the blame. I mean...$%#-ing duh.

Oh BS. We have people living near the edge because of the "system" you support and when someone crosses over the edge into poverty and borrows money on a bad loan or buys lottery tickets out of desperation you blame those people!

How blind can you be? You are such an authoritarian follower you will cling to the tiniest reed of a rationalization instead of seeing the truth that is right before your eyes.

You think everyone who got a bad loan had a free choice? Well, yeah, as free a choice as the guy who steals a loaf of bread to save his starving kids.

Why don't you read a book sometime, preferably a history book? Open your friggin' eyes, because your standard GOP talking points are really losing their power in the face of reality.

I'd bet real money that in standard authoritarian fashion you will retreat to your safe little echo chamber rather than seek the truth. Retreat now and you will end up a bitter paranoid old man whining to himself in the corner.

History is against you, you selfish bitter man. Your kind got their chance, succumbed to greed and corruption and blind adherence to false ideals, doubled down, and totally blew it, leaving people with wisdom and knowledge to try to clean up your mess.

When people can't make ends meet, they must borrow.
Posted by: Nancy Irving

I bet the portion of the total total credit card debt load that goes to people who really can't make ends meet, i.e., there is no way to live within their means even with some self-discipline, is pretty small. Reference Brook's remark about college students graduating with 4-5 credit cards in their wallet on average.

I think most people deep down inside know it's wrong to run up credit card debt so high and it is stupid to do it. I mean, if you had over $10K in credit card debt carried from month to month would you admit it here in this forum? Might as well have a big L on your forehead.

OK, this requires googling, which led me to this, which is interesting...
http://articles.moneycentral.msn.com/Banking/CreditCardSmarts/TheBigLieAboutCreditCardDebt.aspx

Actually, it makes a revealing statement about how pernicious a false statistic can be. Those of you who have read my previous columns about the myth of the average credit card debt can jump ahead. For those who are joining the class late, we'll review:

* The majority of U.S. households have no credit card debt, according to the Federal Reserve's latest Survey of Consumer Finances. About a quarter have no credit cards, and an additional 30% or so pay off their balances every month.

* Of the households that do owe money on credit cards, the median balance was $2,200 -- meaning half owe more, half less.

* Only 8.3% of households owe $9,000 or more on their cards.

Here was an earlier article from 2003 that echoed the above, but also had...

Although most Americans seem to be avoiding the credit card trap, there are still plenty of people on the financial edge:

* More than a third -- 36% -- of those who owe more than $10,000 on their cards have household incomes under $50,000, according to the VIP Forum analysis.
* 13% who owe that much have household incomes under $30,000.
* The percentage of disposable income used to pay debts is still near record highs.
* The median value of total outstanding debt owed by households rose 9.6% between 1998 and 2001.

SJRSM has it pretty much correct. That this finds so much resistance is just a further indication of just how far we have fallen from the ideals of personal responsibility.

Far too many people, incapable of managing their own lives, resort to blaming others for their circumstances, and they are supported by a multitude of enablers.

SJRSM - those results would like fall right in line with what the Standford Marshmallow Study.

"Who would ever guess that a brief observation of a four-year old alone with a marshmallow would be an excellent predictor of college entrance exam scores — twice as good a predictor as IQ test scores? In one of the most amazing developmental studies ever conducted, Walter Michel of Stanford created a simple test of the ability of four year old children to control impulses and delay gratification. Children were taken one at a time into a room with a one-way mirror. They were shown a marshmallow. The experimenter told them he had to leave and that they could have the marshmallow right then, but if they waited for the experimenter to return from an errand, they could have two marshmallows. One marshmallow was left on a table in front of them. Some children grabbed the available marshmallow within seconds of the experimenter leaving. Others waited up to twenty minutes for the experimenter to return. In a follow-up study (Shoda, Mischel, & Peake, 1990), children were tested at 18 years of age and comparisons were made between the third of the children who grabbed the marshmallow (the "impulsive") and the third who delayed gratification in order to receive the enhanced reward ("impulse controlled").

The third of the children who were most impulsive at four years of age scored an average of 524 verbal and 528 math. The impulse controlled students who scored 610 verbal and 652 math! This astounding 210 point total score difference on the SAT was predicted on the basis of a single observation at four years of age! The 210 point difference is as large as the average differences between that of economically advantaged versus disadvantaged children and is larger than the difference between children from families with graduate degrees versus children whose parents did not finish high school! At four years of age gobbling a marshmallow now v. waiting for two later is twice as good a predictor of later SAT scores than is IQ. Poor impulse control is also a better predictor of later delinquency than is IQ (Block, 1995)."

http://www.kaganonline.com/KaganClub/FreeArticles/ASK14.html

Medical bills are the missing element of the discussion here. Far to many of the tragic stories of financial ruin usually contain some version of: "and then I got hurt/sick and my insurance didn't cover..."

Far to many people scrape buy with no or minimal health insurance, and any health care crisis ends up as a double whammy. First, its very expensive to get the care one needs to get better. Second, getting this care usually interferes with ones ability to work. And, with health insurance tied to a job, any illness that results in job-loss is doubly devastating.

You really can't talk about personal financial crises in this country without taking into account how much some families spend on medicine, doctors, and other medical goods that they just can't cut out.

Yancey Ward: Far too many people, incapable of managing their own lives, resort to blaming others for their circumstances, and they are supported by a multitude of enablers.

Sadly, that's true. For example, purchasers of CDO's blamed others for the unforeseeable possibility that real estate values might decline. Enablers, like Ben Bernanke, proceeded to bail them out with our money.

Remember, if you're $100k in debt, you're a dead beat. If you're $10B in debt, you're a respectable banker.

Near as I can tell no one is forcing someone to borrow and spend money they don't have.

You mean like the US Government?

Mmmmmmm....marshmallows...

arteclectic,

That's very interesting, but I have one important methodological question: what about kids who don't like marshmallows?

Near as I can tell no one is forcing someone to borrow and spend money they don't have.

Redirecting the produce of the economy to the major holders of capital and away from everyone else through tax policy and other means doesn't "force" other people, particularly, but not exclusively, those in and on the edge of poverty to borrow and spend money they don't have, in the same sense that someone putting a gun to your head and telling you to give them your wallet doesn't "force" you to give them your wallet.

Alex, I'd have to dig back in to the data to see if there were any ;)

The larger point is that one small change in parenting styles among the economically disadvantaged has the potential for astounding results. If parents would teach children right from the start that every whim and desire will not be met instantaneously, we might be able to change their direction in life. The pattern is clearly set by age 4, so the changes need to happen in the early years when children are at their most impressionable.

I think most people deep down inside know it's wrong to run up credit card debt so high and it is stupid to do it.

I thin most people know that any amount of any kind of debt is worse than no debt. I think most people also know that no amount of any kind of financial debt is intrinsically "wrong", and that whether or not the decision to take on more debt is right in any particular circumstance depends on what the reasonably available alternatives are.

OTOH, I think most people (unlike you and Yancey, apparently), are also capable of realizing that the responsibility of people who decide to take on debt in particular circumstances does not eliminate any responsibility held by any people who knowingly (and, a fortiori, deliberately) created the circumstances.

OTOH, I think most people (unlike you and Yancey, apparently), are also capable of realizing that the responsibility of people who decide to take on debt in particular circumstances does not eliminate any responsibility held by any people who knowingly (and, a fortiori, deliberately) created the circumstances.
Posted by: cmdicely

Uh, no. But in the same manner that someone who is fat is ultimately responsible since every calorie in their fat butt was put their with their hand through their mouth, the person who runs up the debt is ultimately responsible. Actually, the stats I showed imply people in general aren't doing so badly, which was pleasant news.

This is an interesting question. I'm raising my kids to be fiscally responsible, and it is made all that much harder by (for example) the assault on my son by credit card lenders while he is in college. It'd be nice to shut them down or control them.

But I'd also like them to not be exposed to so much violence on TV, for example. And sex (the younger kids). And a whole slew of other things that undermine a message of personal responsibility. What of that?

"I'm sorry, but I don't feel sorry for people who purposely overspend on non-essential items."

Which is it? Are you sorry or are you not sorry? Or maybe you're sorry because you're not sorry?

All those items listed by Brooks are logical outcomes of the economic and political system he otherwise admires.
Posted by: bobbyp

Exactly. Life's too short to read Brooks' drivel.

'In the US, nearly all the benefits of growth in the past decade have accrued to the top 10 percent of society; while the top .01 percent has seen incomes grow 112 percent, the incomes of the bottom 90 percent grew by only 2 percent. The benefits of global growth accrue to fewer people. The richest 1,100 people in the world today have a net worth that’s almost double that of the 2.5 billion people earning the least.' Superclass and the Inequity of Globalization David Rothkopf YaleGlobal, 14 May 2008 http://yaleglobal.yale.edu/display.article?id=10803

Near as I can tell no one is forcing someone to borrow and spend money they don't have. Ultimately it is the borrower who signs their name on the dotted line who must bear the blame. I mean...$%#-ing duh.
Posted by: SJRSM on June 10, 2008 at 9:35 PM

How many John Does have MBAs like the lenders?
Responsibility is one thing and capability is another. For the lenders the fact that they have the capability to know whether the loans they want to make are good or bad makes them CULPABLE of making bad loans. For the borrower who works with his hands, has no college education and just needs some money to get by there is no CULPABILITY, just rotten luck to be involved with leeches who don't even have to advertise honestly since Ronald Reagan did away with the "truth in advertising" law.

Sure, responsibility is important, but moreso with those who have capability.

The smug GDP comparison is bullplop. The UK at the end of December 2007 general government debt was 43.8 per cent of GDP.

http://www.statistics.gov.uk/cci/nugget.asp?ID=277

In comparison, the US percentage hasn't been south of 50% since Bush I

http://www.google.com/custom?hl=en&safe=active&cof=&q=US+government+debt+GDP

It's not just high interest that puts payday lenders' customers behind. I had an Army buddy who would run out of money on the 22nd of the month, like clockwork. He'd borrow some from me and some other guys and then, on (monthly) payday he'd make a big ceremony of paying everyone back. It was the sort of silly impromptu ritual you remember when you're old.

But then, on the 22nd, he was broke again. And nobody charged him any interest.

Once you're on that cycle, it's nearly impossible to break out of it.

Republicans are to blame.

"Why are you buying an used [car, clothes, etc.] when you could buy a new one? What are you, some kind of HIPPIE?"

"Why are you cooking your own meals from low-cost vegetables, grains, and beans when you could eat out every night at Red Lobster? You anti-American vegan freaktard!"

Brooks loves Red Lobster.

The credit card nonsense started way back in the 70's when the banking industry decided to jump on the bright shiney new 'culture of fear' bandwagon that had just been rolled out by the GOP. Scaring the crap out of everyday citizens with essentially fictional accounts of how common pick pockets and muggers had become at the time (as if the past had been some miraculus time of civility and safty).

It's still BS. There is FAR more finantial loss due to credit card fraud than could ever be lost through pick pockets. And muggers are muggers, having a half a dozen cards rather than couple of hundred in a wallet or purse where no one is going to see it anyway is not going to make you any less a target for violent crime.

Add to this the fact that unless you are making several times the median income your paying nearly as much to the banks in fees as your are in taxes and you can see that the whole thing is little more than a big rip-off of the middle class and the poor.

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