On Mon, Nov 17, 2008 at 6:19 PM, Olin Elliott <[EMAIL PROTECTED]> wrote:
> >So I don't think I'm able to refute the idea that a majority of U.S > >citizens have credit card debt. > > To be fair, I don't have statistics for my claim either. It could be that > the majority of Americans don't have credit card debt, but I would surprised > by that. In any case, I do believe that my generation -- Baby Boomers, > loosely -- internalized ideas about possessions, debt and spending that were > very different from the generations that proceeded us. I think it is important to recognize that having credit card debt is not inherently bad (no matter what my parents said). I wouldn't want to use it as a proxy for "living beyond your means." At the same time, I have no doubt that we have excessive unsecured consumer debt in the U.S. and a dismal savings rate. The latter isn't quite so bad for us, I suspect, or the cost of capital would be much higher. But the cost of consumer capital is fairly crazy, given that some portion of that debt is at interest rates that seem like usury in comparison to the prime rate. That's where the lending appears to me to be abusive -- granting credit at high rates, knowing that a large percentage will default, but knowing you'll profit from those who don't. I think there's a special place in hell reserved for people who do business that way. Anyway, what matters is ability to service the debt, not the debt itself. For people who have irregular incomes, consumer credit may make perfect sense. Credit cards have financed a certain amount of startup businesses. Expensive, but if it works, who is to argue? Been there, done that myself. Nick _______________________________________________ http://www.mccmedia.com/mailman/listinfo/brin-l
