In Debt We Trust

Bruce Springsteen--"My Best Was Never Good Enough" (mp3)


Well, I worked hard and I tried to put my money away,
But I got debts that no honest man can pay. --Bruce Springsteen

Something very curious happened in the world of debt this week. People paid a bunch of it off. And there was no rejoicing. Why?

Back up first. You will recall that one of the key causes of the current recession that we are in (or coming out of, depending on how your 401k is invested) is the mortgage crisis, specifically, the lending of money for the purchase of homes to people who could not afford those homes. Money that put them into greater debt than they could handle--payments didn't happen, people lost houses, banks lost money, banks and other lenders failed.

Many analysts suggested that things would become even worse because of another debt problem--personal consumer debt. The statistics have been everywhere for decades. Americans aren't saving enough. Americans are in bad shape for their retirements. Americans have too much credit card debt.

So what should Americans do? Well, Americans decided to pay off some debt. Quite a lot of it actually. When the numbers came out last week for whatever time period they were measuring, analysts were expecting Americans to pay off about (in round numbers) $5 billion of debt, especially credit card kind of debt, interest payments, loans, etc. But Americans have gotten the message, and, instead, we paid off over $20 billion in consumer debt.

You'd think that would be a cause for celebration. Hooray for us, right? We're altering our lifestyles, behaving more responsibly as a people. Heck, even yours truly took out a 401k loan (not really a loan, since I'm borrowing from and paying back myself) and paid off $6000 of a Bank of America credit card that was charging me 29.9%, or something like that. It was kind of a no-brainer that didn't really enter my brain until I had some time to think about it. Let's see, pay a huge bank that's received billions in taxpayer bailout dough 30% of the balance each year, or don't pay them 30% and pay myself about 10% instead. That's quite a swing.

But here's where it gets Orwellian, Brave New Worldian, you take your pick. The "analysts" were not happy at all that consumers had paid off so much more debt than expected. They said that consumers paying off debt instead of spending was going to slow the economic recovery.

Just think about it for a minute. Ultimately, the official blame for the economic downturn rests largely on the back of consumers who bought homes they couldn't afford and who couldn't handle the debt. And the cost of the bailout for that downturn rests on those same backs. And now the blame for a potentially slower-than-expected recovery points at those same consumers.

What's a poor, confused consumer to do?

Me? I blame capitalism. And, please note, attacking capitalism does not make me a Socialist; it makes me a doubter of capitalism. The success of our economy depends on buying and buying, spending and spending for new versions of goods that haven't worn out necessarily, but are no longer "in style," if you're talking something like clothes, or "cool," if you're talking cars and electronics.

The idea of capitalism made sense maybe even as recently as 50 years ago, when there was room for expansion and when there were seemingly unlimited natural resources, but now, when people are everywhere and are using everything up and natural resources are scarce and recycling is still something with the status of a Sunday School project, capitalism does not make sense.

The idea that the way to fix our current economic struggles is for us to compromise our futures and undertake a whole new round of expensive purchases that we can't quite afford is absolute folly. In essence, we are being expected to save us from ourselves and from everyone who made it easier for us to get where we are. And we are being expected to save them, too. Some of that, yes, I'm willing to take on as a foolishly-idealistic taxpayer, but I do not see it as my patriotic duty to dig myself a deep hole of debt and to replace everything I have that kind of works or works well enough with this year's model. Nope. Sorry.

But if you agree with me, I'm sure you realize what the problem is, right? The problem is Plan B. That's right, Plan B, the only other proven way to get out of a depression.

War.



Springsteen's The Ghost of Tom Joad is available at Itunes.