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Point one: while I know it is fashionable to assume that those in the US in great trouble with their debt loads have gotten to where they are by consuming unwisely and/or otherwise making individual choices (like too rich a home, too big a car or whatnot) the fact of the matter is most people who end up in trouble do so because of one of three reasons:

  1. Catastrophic illness of themself or a loved one;
  2. Loss of spouse (either by death or divorce/separation)
  3. Loss of job.

These three factors accounted for roughly four of five bankruptcies in the US prior to bankruptcy "reform"; since Democrats and Republicans came together to make it far more difficult, unlike for the wealthy (via their businesses), for middle-income Americans to discharge their debts, the credit crisis becomes the logical proxy for what in the past simply was classified as "personal bankruptcy".

Point two: You will never succesfully cast a progressive frame on this issue when you lead your argument with a reference to debt due to "shopping sprees". That's a right-wing frame you are employing, best to not even go there. (It's an inaccurate one to boot.)
 

The Hun is always either at your throat or at your feet. Winston Churchill

by r------ on Mon May 26th, 2008 at 12:54:24 PM EST
Redstar,

I agree with your analysis of reasons for cc debt and can confirm it from my own personal history.  Dental problems and car trouble were the biggest sources of increases, but vacations added their share when my son was 8-13.  I only finally got rid of cc debt with a 2003 re-fi.  Fortunately I sold the house in L.A. in Nov. 2005 and moved to Arkansas, free of cc debt.

However unfortunate the "spending spree" remark may seem the bulk of the diary is useful advise.

"It is not necessary to have hope in order to persevere."

by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Tue May 27th, 2008 at 01:21:57 AM EST
[ Parent ]
That was when the conditions were relatively good. With a special stress - medical, job, divorce, they end up suddenly with no access to one more shot of refi and credit and then, it breaks.

But now, I think we're going to start and see more bankruptcies rooted in overconsumption in the run-of-the-mill middle class. It's gonna be ugly.

by Francois in Paris on Tue May 27th, 2008 at 02:58:46 AM EST
[ Parent ]
Oh I have no doubt we will be hearing about these middle-class big spender exceptions to the general rule about financial hardship in America. Fact is, that is the way the neo-liberal yellow press will talk about such things, so as to show, with quite a broad brush, that none of the borrowers deserve help. They've done this time and again and there's no reason to believe this time will be any different.

Given current trends in health insurance in America today, in addition to the coming wave of unemployment and the impact this will have on family stability, I find it hard to believe, though, that middle-class profiligacy will be anything more than the seriously minoritarian exception to the rule it always has been viz. financial distress in America.

My larger point is that playing into this rightwing rhetorical frame is severely counterproductive. Unless, of course, you're not playing on the same side.

The Hun is always either at your throat or at your feet. Winston Churchill

by r------ on Tue May 27th, 2008 at 12:33:05 PM EST
[ Parent ]
The facts are never offensive and you are so hurried at defending your position, you forget to consider them and their implication.

What's going to happen is that the unusual hardship - loss of jobs, specifically - is going to become very usual and that's where widespread pre-existing over-leveraging is going to hurt. And that's where the newspeakly named "Bankruptcy Abuse Prevention and Consumer Protection Act of 2005" is going to hurt double-plus good with its special favors to the CC sharks.

You are going to see a big change in bankruptcy typology. Not just the big accidents anymore - hospital bills and no coverage - but the average Joe who got sucked up in the wealth on credit con. The focus is going to shift from the "hapless victim" to the neighbor or the friend "being denied the American Dream". It's new and it's going to have important political and social implications.

I don't think pointing that out is playing in the rightwing rhetorical frame. I my mind, it's very clear. It takes two to play the idiot debt game : the debtor and the lender, and if the debtor can't pay, fuck the lender. It shouldn't have loaned the money in the first place.

Oh I have no doubt we will be hearing about these middle-class big spender exceptions to the general rule about financial hardship in America.

No and that's the point. These "middle-class big spenders" won't be some other guy, unknown, everyone can scorn safely from a distance, or some victim of life you can pity but no, it's never going to happen to me. The "middle-class big spender" will be the rule and it's going to be you, whoever is sitting in front of the TV being served that discourse*, your sister, your father, your colleague at the office, your friend. It won't fly. People don't like to get the finger wagged at them.

(* Assuming that discourse is served for very long. I'm dubious. I don't think the lenders will be so stupid as to continue to openly confront and piss-off 2/3 of the country. They'll rather concentrate on restructuring and "helping" and do all they can to bleed a little more fluid from the stone for a few more years. Being aloof is not doing any good to the mortgage industry right now. I think the rest will learn.)

by Francois in Paris on Tue May 27th, 2008 at 03:09:51 PM EST
[ Parent ]
If in fact it is 2/3 of the population which will find fingers wagged intheir general direction, I agree wholeheartedly with your analysis, noting at the same time that much social regression in the US is predicated on small and powerless minorities of the populace (the sick, the poor, the battered, children, et c.) getting the shaft, and not large swathes of the white middle class (which would certainly be the case of we got to 2/3rds...)

If the pain hits the white middle class, then maybe we will see some movement. But, this being America we are talking about, we may not like the result.

The Hun is always either at your throat or at your feet. Winston Churchill

by r------ on Tue May 27th, 2008 at 04:15:05 PM EST
[ Parent ]
Yeah, it may come with a flag and a cross.
by Francois in Paris on Tue May 27th, 2008 at 05:44:39 PM EST
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Thank you for lumping me with the right wingers. Perhaps you could read the diary again before making such assertions. I shall restrict my pieces to US sites from now on.
by Asinus Asinum Fricat (patric.juillet@gmail.com) on Fri May 30th, 2008 at 05:59:55 PM EST
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