Feb 24, 2008

Credit cards are us

As the subprime mortgage crisis continues to reveal the weaknesses in our shoddy middle-class economy, more attention is being paid to the financial instrument at the heart of it all: the credit card.

If you want to know how countless families came to believe they could afford houses that they could not afford, and then refinanced these house to fill them with more things they could not afford, look no further than the economic lessons offered by the credit card.

The credit card isn't merely a mechanism with which we buy things. It is a part of the foundation of our economy and a touchstone of our culture.

The credit card has taught generations how to spend. It has altered our sense of value and influenced our understanding of responsibility. It closes the gap between the life we have and the life we want - the life we think we deserve. It is how we keep up with the Joneses; how we mask our poverty; how we keep up with inflation; how we keep realty at bay.

Credit cards prop up countless families. They make attainable that which cannot otherwise be attained. They augment stagnant wages. They reinforce the American ethic of instant gratification with a carefully structured repayment plan that masks the true cost of the bargain.

The devil should be so crafty.

TIME magazine has a short piece about the abusive penalties and fees credit card companies are charging customers these days (and have been for years). Congress, having spent decades giving banks a freer hand, now appears to be rethinking deregulation. But whatever Washington does, it will come too late.

The entire country is approaching its credit limit and the bill has come due. No one is blameless in this transaction - not the banks that made it too easy to get into hock, not the politicians who relied on this false economy to claim economic success, not the credit card holders who knew it was all too good to be true.

But what will we use to pay down our debts, since such a huge portion of our assets are on loan?

The entire nation needs to rethink the value of things and come to grips with how much it really earns. Otherwise someone else is going to buy up all of our debt and, like those credit card companies, start charging such excessive fees and penalties that everything we earn will go to paying them off.

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