Today US Treasury Secretary Henry Paulson held a press conference to clarify points about the $700 Billion bailout. He mentioned giving aid to companies that supply “consumer debt”. Does this mean that because individuals cannot repay their consumer debt, companies like American Express are failing? This is a good thing. Consumer debt is part of the main underlying problems with our economy, it is HUGE! Let the credit card companies crumble.
One reason Paulson gave for this bailout of the “American Expresses” is that these same companies provide student loans. I don’t buy it. These companies are not in trouble because John Doe, now Dr. John Doe, cannot repay his student loans. The problem is the Joneses (as in “keeping up with the Jones’). How do we define consumer debt?
Wednesday, November 12, 2008
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2 comments:
Here is the problem: Our economy is built on the back of consumer debt. Without consumer credit, people can't spend and our economy stays stagnant. Is this part of the bailout is aimed at supplying relief to the credit crunch?
The credit card revisions that have recently happened have actually helped the consumer by regulating interest rates and limiting fees.
I am with you. Let the credit all dry up and when our washer breaks down, make trips to the laundry mat until we save enough to buy a new one. But cars? And houses? Meanwhile, the wash machine company goes out of business waiting for someone to buy a washer, and then the laundry mat is full and we are back to washing clothes on the rocks in the stream. Ha!
Washing our clothes in the stream, if that is what it takes, then good!!! I am not serious, but there is a massive problem with the fact that our economy is built on cosumer debt- it is not sustainable!!! Are we not prolonging the inevitable? Why don't we just get a 5th credit card? a 6th? a 7th? When will it end? What is scary is that our government operates the same way. Figuratively, our government maxes out one credit card, then goes and gets a new one (we actually have to get 2 new ones to pay for our bailout). When will it all come to a head?
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