Debt becomes their
I read this article “Goodbye, American dream”on Financial Times, July31/August 1, 2010. This is a dreadful story, two families, middle class workers, steady income, but the living is still harsh for them, compared with their father’s. Their financial situation is very tied. They cannot afford any luxury or sickness. And they do not have any social benefit, just like those in Canada and Europe. It seems the American dream has disappeared.
Why this happens? Where should we impute? Who should we blame? All the rightwing politicians?All the unions? The Globalization? The treacherous banks? Or the foolish self?
As I have some friends living in USA, they are not as bad as those two families. And I do not believe that those friends of mine belong to the top 10% of people there. The major difference between my friends and the two families in this article is that my friends have much less debt than they have.
The crisis in the USA now is not caused by the other things, but the people heavily believe in debt. Every spending is built on credit. Although the interest is affordable, but the payable will be kept on increasing. Until it reachs a point where the receivable cannot match. The tied balance will create many problems if the asset value becomes diminished.
Of course, when the property price is booming, it is America dream. The mortgage bank can call their customer four times each night for loan offering. They called it predatory lending. When the property price is busted, that’s goodbye! The property will be foreclosure.
It seems to me that the way the US government measure the economic revival is not by the money growth, but the amount of loan offered by the banks. Certainly, US government wants their people to borrow more and more because the government does not want their people's money to make money. They want only they can make money. So, suppress the interest as low as possible.
It should be quite clear right now, the debt cannot create American dream. How many people in States know that? The top 10%? Or the bottom 90%? Hopefully at least, they should begin to understand that to decrease the debt is the only way to cure the nightmare.