We’re a few days away from the US defaulting on debt payments for the first time. While partisan politics keep a resolution from being announced at present, I feel that one is pending and I don’t believe there will be a default. Neither party nor the President want to be remembered for bringing a new wave of economic suffering upon the US, spreading internationally as it can’t pay its obligations. While there are many reasons as to why the US national debt has increased to such a point as the country faces bankruptcy of a sort, aside from waging war one of the chief issues is the reluctance to pay for ‘things’ with saved rather than borrowed money. Governments, like people, want what they want when they want it.
This air of entitlement is not monopolized by the oligarchy in DC. I was working outside most of today, listening to the local radio. Two Courtenay car dealers had ads running consistently and one of the chief points of their ads was “if you have bad credit, have been bankrupt or unable to borrow money it’s not a problem; we can still find a way to loan you money to buy a new car”. A Courtenay furniture store says “remember, we don’t want your money”. They were prepared to find a way for people with poor credit and/or no money to borrow more. While people have a responsibility not to borrow when they can’t afford it, business (and government) should have the same responsibility to extend credit only to those who can afford it. Have we so quickly forgotten the lessons learned in 2008/2009 when lenders were extending mortgages to people with no savings, no jobs and no income?
Isn’t this part of the problem? Remember the time when we saved for things; we didn’t buy unless we had the money. Now it is all about instant gratification and impatience. The judicious use of credit is a useful and necessary part of our world but used irresponsibly it can cause massive problems for both people – and nations.