Joe Doakes from Como Park emails:
I overheard a young woman in the building talking on the phone in the break-room. She’s stressed out today. She thought she was current on her debt consolidation loan but the bank claims she’s been a month behind for ages. Out of every $60 payment she makes, $40 goes to interest and $15 to late fees which means the principal has hardly been touched. She and her live-in boyfriend have no more available credit and can’t get caught up because neither of them have an extra $60 that isn’t already promised to someone else.
I remember those days, when my family was young and struggling, when $60 was not a modest dinner at Red Lobster but an insurmountable obstacle. Seems like a lifetime ago. I suppose everybody must go through it – no other way to learn sacrifice, delayed gratification, habits of thrift.
Unless you’re a politician. Then you just spend whatever you like on whatever you want. Must be nice.
Joe Doakes
Joe:
Lets remember a key point which the sad story you just told failed to point out quite dramatically. If you’re a federal lawmaker you don’t run into the barrier of the bank and the credit card saying you have no more credit. What slows down people spending like your lady is that she has no credit to do new spending. On the other hand with the federal reserve not only saying the money is there and no one saying you can’t borrow more you’re not stopped from spending.
Walter Hanson
Minneapolis, MN
One word:
“Greece”
Democrats, take note. We can have modest pain now, or horrendous pain if we kick the can down the road. The Chinese will only fund us so long.
Interest rates are insanely low. That won’t last forever. Imaging trying to finance trillions of dollars of debt if we have to pay even 2% higher rates.
Once you start an entitlement, its there forever. And keeps growing. And fraud. Its so easy for crooks to steal from the government. Look at Medicare/caid fraud. Pigford fraud. But hey, at least the park service got rid of those little confederate flags in the gift shops.
Was she talking about being behind on her $60 payment on her fancy iPhone?
What I’ve found is that folks who are complaining about never being able to get ahead are the same ones who view cable TV and new smartphones as necessities.
What nerdbert says. A woman who doesn’t delay gratification–moving in with boyfriend instead of waiting to marry him–is probably going to be one who is going to have the spending habits that will result in….trying to pull one’s fat out of the fire with a debt consolidation loan. Thankfully she’s not in that deep–typical rates of 5-10% for a consolidation loan will get you to $4-$7000 of debt overall–but five will get you ten there are some really simple things that she could do to reduce expenses.
It’s also worth noting that those who do not delay gratification–over spenders and those who live in sin–are generally Democratic voters. And so the cycle continues. If you have a friend doing this, point them to Dave Ramsey.
If she’s paying late fees she must not be making the $60 payments every month. How could she think she was current?
The Chinese will only fund us so long
Chinese no longer have any money to fund anyone. They have a tremendous debt problem.
One word: “Greece”
In theory, Greece could stick with the Euro just like the U.S. could have stuck with gold. The consequences of that choice would make the U.S. in the 30s look like utiopia, I suspect.
Um, Emery, not to burst your bubble regarding real money, but one word:
Switzerland
Real money didn’t crimp their style, economically speaking. And regarding fiat money working almost as well as gold, one word:
Deutschmark
It’s the only fiat currency I’m aware of that ever came close to retaining its value over time. And obviously the Wirtschaftwunder occurred while the Bundesbank remembered the trauma of Weimar and what followed quite acutely.
It is as if business proceeds better when people can depend on the value of their currency. For that matter, what happened with the U.S. economy when Paul Volcker and Ronald Reagan turned their guns on inflation? Sorry, but inflation is not Greece’s way out. Their way out is to cut pensions, cut government jobs, and let people go hungry until they get off their a**es and find some work.