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Full Faith and Credit...
Thanksgiving pies | 25-November-04 | Ron Pickrell

Posted on 11/25/2004 8:26:53 PM PST by pickrell

In the mail today, a notice came, declaring that the new late fee for the Bank One credit card is now $ 39.00, and that the default interest rate is now 28.9% of balances outstanding. Concurrently, Democratic Senator Chris Dodd is again re-shopping his bill to mandate full disclosure of these new costs.I'll grant that the Senator actually feels he is siding with the consumer; but just as certainly, he and his colleagues are once again entirely missing the boat.

In the early 1980's, minority spokesman and civil rights "champions" railed that credit was being denied to lower income and minority citizens, and that the result of this denial was the withholding, from these same citizens, of the chance to participate in the American dream. As usually happens in such cases, the media filibustered, pressure was applied, and legislation was soon passed. The Democrats acted to empower the people...

After all, this is the reflexive Democratic answer to such problems, and, far more revealingly- this is a window into the very heart of the liberal mindset.

As a result of the "empowering" liberalization of credit policies for lower-income, and for ever younger, potential credit customers, the overall indebtedness of the American public has now reached truly frightening levels. As so often happens, in addition to the desired results of permitting many in America to purchase homes and vehicles affordable to the debtor, credit standards were relaxed and the scrutiny necessary to prevent debtors from voluntarily immolating themselves in a sea of unserviceable debt was swept aside because of political considerations.

The seppuku knife became user-friendly. Those of us who have disdained the lure of pre-approved checks for that dream waterpark vacation have watched others drown themselves. It explains the new scam of promising to "wipe away" troublesome debt by paying the $ 2,000.00 to that lawyer who assures you in the commercial that "he's on your side...".

But far more insight may be obtained by a careful examination of the impact of these earlier liberal policies, than might at first be assumed.

To do so will require a brief sojourn much further back in our country's history.

Coming into the 1930's, Americans learned the hardest lesson possible about debt, and it's brutal impact on most aspects of life. As the children of the depression, our parents suffered firsthand from the harsh penalties of this economic reality. They watched as the money borrowed by their parents to finance farm equipment, to purchase homes, and- for the yet more foolhardy-, to invest in the inaptly labeled "securities" of the stock market, became an instant trap that brought widespread ruin. Credit had been easy, and credit had been taken advantage of.

When the bubble burst in late '29, banks which had themselves leveraged their customers' deposits into losing gambles in the stock market, found themselves insolvent and unable to cover panicky customer demands for withdrawals. The snowball effect of sudden fear created conditions of brutal deflation, as fewer and fewer dollars remained in circulation. Risks that had seemed moderate, when debtors had earlier borrowed money for seemingly rational purposes, suddenly overpowered all previous calculations. The crush was on. Terrified people suddenly learned what tight money really meant.

After the toll in tragedy was finally and fully exacted, our parents grew up and then raised us, the "boomer" generation, with a suspicion of the notions of "free money", and "enjoy now, pay tomorrow...". The lesson remained forever branded into their minds, and through them, passed into many of our minds.

Arguably, perhaps therein lay the genesis of the conservative movement.

The liberal philosophy holds that the "good life" consists of "getting one's fair share of the pie"- that huge pile of money that conservatives were simply quicker at getting their hands on.

The conservative philosophy holds that making pies is hard work; that fruit trees must be planted and cared for, that flour must be earned, and that an oven, if one works hard and is lucky, may enable one to enjoy the "fruits" of one's labor in the future. But that oven must be paid for with someone's labor, if anyone is to enjoy that pie, and the next. Without the committment to work, sick or not, happy or not, as long as it takes, to make and sell enough pies to earn the money required to repay the note on the oven, when due and in full, one didn't even THINK about borrowing the money to buy the oven.

An entire philosophy is shaped by the liberal fallacy that "free money" exists, and is simply waiting to be passed out. The concept of easy credit is a fearsome and effective tool for furthering self-destruction and servitude, since in the mind of the young citizen, paying later has been successfully painted to mean that you can have what you want today, without that unnecessary need to first save the money required to satisfy your desires.

An entire industry has developed around assuring the novice wage earner that only the foolish and naive will deny themselves their desires simply because they haven't yet collected those future paychecks that will surely issue to them without interruption.

Come're in the Pepsi generation. Just do it.

After the furniture has been delivered from the rent-to-own store, the Mustang is now parked in the driveway, and the richly deserved spring-break vacations have been enjoyed, the new worker eventually begins to receive the bills. What had seemed easily manageable, under the breezy assurances of the MTV conventional wisdom, suddenly weighs upon him like a hard-time, 20 year sentence. That "zero-percent interest for the first month", suddenly removes it's cloak.

It never before occurred to him to wonder why, if he had not already accumulated the excess earnings to fund his additional wants in the few years that he had already worked...exactly WHAT would be different in the future? If he was not accumulating savings prior to his recent satisfying of all of his desires, but rather was merely breaking even after the rent was paid, ...exactly how would he afford to ALSO remit the additional money now due from his signing on the dotted line? This didn't even consider the "rental" costs of that principal which he spent, which will acrue remorselessly until the piper is paid, and the principal is repaid.

If he later desparately tries to redeem part of his debt by re-selling some of the suddenly less glittery toys, he will discover the hard way why, in the game of "Monopoly", houses come down at half-price. It's only the mortgage that stands firm.

The problem with the liberal solution is that adults, parents, realize that giving children all of the candy that they can eat may temporarily raise the parent's stature in the eyes of the children...until the inevitable cavities force the trip to the dentist. When the fear of the needle and the promise of the drill now become apparent, what will that parent then say..who couldn't bring himself to act like a parent when it was most necessary? Should he gently advise his offspring that debt...has been shown to be an effective, wealth-preventive dentrifice, that can be of significant impact when misused as directed in a conscientiously applied program of oral hygiene and regular professional care?

Were some of us afraid to appear "unhip", by hammering into our children the opportunity-cost of each decision that the child will eventually make? At what cost didn't we prepare them with the same lessons passed on to us by our parents?

What will our nation say to the children who watch their parents' deficit spending rising on a national basis, and wonder why we apparently feel that things cannot go suddenly wrong? What example have we set for them? Our parents would likely be appalled, after such a price was paid to first learn the lesson.

Ironically, the question may not even be asked, though reality has a nasty habit of catching up with our desires. After all, we are entitled to our pies...without all of that messing about over who will eventually pay for the oven. Why worry about how we will suddenly also pay for the unforeseen fences and firearms, necessary to protect the results of our pie-making labors from the brutal thugs who would steal both pastry and promise of the future?

We perhaps have taught the next generation that the liberals who formerly worked so hard to make it possible for you young citizens to exercise your constitutional right to economic indenture, may somehow quietly and magically correct their previous error, by now insuring your right to know just how badly that you have been 'had'. Printed in 'after-the-fact' font, on your monthly statement.

In so many aspects of liberalism, isn't the focus cleverly redirected from the catastrophic results of past policies certain to result in self-inflicted wounds, to the warmth of providing properly-labeled and approved, free bandages.

Do they feel your pain? More importantly, did they help to create it?

Enjoy your pumpkin pie, and the opportunities of this great experiment in personal freedom, and personal responsibility, that we call America.


TOPICS: Business/Economy
KEYWORDS: bankcard; credit; creditcard; debt

1 posted on 11/25/2004 8:26:53 PM PST by pickrell
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To: pickrell
Access to credit shouldn't be debated as a political issue. Fiscal management should be. Conservatism implores personal responsibility. The lessons learned from credit failures in previous generations should have been passed down, a true failure. Another is the lack of personal finance management is not taught early in public schools. However, credit companies operate apolitical and market to the willing and also the unsuspecting. No fault can be made to a corporation that discloses by law, the contract between lender and borrower. You failed to note the outrageous bankruptcy claims filed, more every year. The rampant consumerism among those that can not pay for it can be blamed on Leftist ideology. The right of the ability to consume, cannot.
2 posted on 11/25/2004 9:10:45 PM PST by endthematrix ("Hey, it didn't hit a bone, Colonel. Do you think I can go back?" - U.S. Marine)
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To: endthematrix
"...No fault can be made to a corporation that discloses by law, the contract between lender and borrower. You failed to note the outrageous bankruptcy claims filed, more every year. The rampant consumerism among those that can not pay for it can be blamed on Leftist ideology. The right of the ability to consume, cannot...."

You note correctly that the lenders who operate within the auspices of the law should be held harmless. In this I agree. If my post left the impression that I blame the recent trend towards credit overextension solely or even mainly with the creditor, than I have indeed failed in driving home my point. The incidence of bankruptcy claims has begun to be dealt with through recent legislation aimed at curbing those abuses, but the law can only go so far in solving with this problem.

So can I only go so far, as a long post here is considered undesirable. I wish we could more thoroughly explore every part of the conservative platform and the economic realities of life, but we are limited by the posting realities of Even so, we often try people's tolerance.

This problem, whether we wish to face it or not though, is becoming acute. And I am not merely speaking of personal debt, but even more importantly, of the collective debt of all Americans that this federal budget deficit is becoming.

I used the vulnerability of the young citizen as an example, not as a limit. Of all of the various groups of lower-income earners, the novices to the marketplace are perhaps the most susceptible to the lure of instant gratification. In my opinion the young can usually survive whatever damage they inflict upon themselves, and perhaps at least be chastened by the experience. Any attempt to limit their, or anyone else's, right of ability to contract for credit would be an exercise in futility, and I don't know of anyone who propounds that.

It seems to me, however, that as much as we decry and rail
here on Freerepublic at outrageous examples of what is being taught in schools today, in so many of our posts here, we must at least stand prepared to offer concrete examples of what we are in favor of, else we are not much different from the demonstrators who perennially wish for change, but have no clue as to what they want to put in place of that which they want torn down.

One of the few things I would think likely to be universally agreed to among Americans, would be that the science of finance and credit management is apolitical and outside the contested zone of values and religion. What more suitable and valuable subject could there be for high school curriculum? If they could do anything right, surely, they could at least prepare our young adults to manage their own finances, and understand the mechanisms of budgeting and asset accumulation. If not, then exactly what good are they, after all of this education money has been handed to them?

Surely no one can believe that anyone gains from being overwhelmed by debt? Yet as crushing as this burden may be for individuals, a more overwhelming threat is poised just over the horizon, whether we wish to acknowledge it or not.
The principal is the same, and so is just easier to illustrate on the personal level.

Many conservatives have defended the overspending by their own party in congress. Agreed, that we had to re-elect the most fit candidate for President as a first priority, and that we must win this present war with terrorism as our second.

But a silence seems to have descended in regards to the massive overspending going on in congress, now that we are in power.

We will not be able to make our younger generation understand the sweet poison of "buy now, pay later" unless we hammer the point home to them...before they are in too deep.

Who...will hammer it home to us adults?
3 posted on 11/26/2004 9:25:21 PM PST by pickrell (Old dog, new trick...sort of)
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