A typical left wing screed.

Quitting saving does not give people “breathing room.” It paints them into a corner.

The other commenters have it right. People believe they have an entitlesment to things they can’t afford.

The guillotine?

http://youtube.com/watch?v=QCu-XnVxhfk

Since the 1970’s, so much of this great nation’s great wealth has been funneled to the richest 1% that everyone else has had to run faster and faster just to stay in place.

Sending women to work bought us some breathing room. Having fewer children bought us some more. We quit saving and got another short respite. Finally, the only way that the bottom 90 to 95% of the country could postpone a serious drop in the standard of living was to use home equity and credit and hope and pray that things would somehow get better before the bills came due.

Well, dang it, it didn’t turn out that way. I wonder what’s next – rescinding of child labor laws?

Current middle aged families were raised into a consumption system of “entitlements” or what some call the “ME” generation. They were raised to assume they could have any and everything they asked for in life. If one did not have $$, credit would suffice. Now there’s a problem paying back all of those foolish loans. Couple that with the point made earlier regarding enormous expansion of dual income families and their associated guilt driven need to buy everything for their little ones and you can envision why we’ve evolved into our credit generated consumable bubble economy. Test first, lesson later. We’re now about to learn about poor fiscal habits in a BIG way.

I’ll take a stab at this. Many observers have described the US as evolving in the direction of a winner-take-all society, in which the distance between the top of the socioeconomic ladder and the bottom and middle rungs has been increasing over time.

The decline of manufacturing and the rise of financial services in the US and the resulting shift in income distribution over the last couple of decades are part of this story, but it is also a broader cultural phenomenon, seen in non-economic areas where a social darwinian ethos at the micro level has taken hold.

Any middle class parent in the US with school age children can tell you horror stories about how competitive is it today, at school, in sports, and even in social organizations like the Boy Scouts which in theory promote an ethos of cooperation and group solidarity.

Given access to an apparently limitless supply of per capita debt, US consumers have been using credit as a social escalator and/or safety net to deal with these darwinian pressures, because the message that our culture has been sending out loud and clear is that there are winners and losers, the former go on to bigger and better things, and the latter are trampled underfoot. If max’ing out my VISA/HELOC/etc is what it takes to ride the up escalator rather than the down escalator, well so be it, I can always pay it off when I get to the top. That’s what the average US consumer has been thinking.

A good question, and it deserves a longer answer, but I am afraid I will have to be brief. The US, UK and Australia all suffer from high consumer borrowings and low savings. This is something of a cultural phenomenon.

Two main causes: stagnant average wages (you now have most married women working, which was unheard of in the 1950s, and it appears to be largely to support household incomes rather that out of a feminist impulse to have a richer life) and more tolerant social attitudes towards debt (combined, of course, with more access to debt).

America is a terribly plutocratic society; many people feel compelled to keep up with their neighbors. For instance, my attorney, who has become a good friend, has a child in private school. That is already a big chunk of her household’s discretionary income. When the kid wants a new iPod or a new laptop because his friends in school have them, she feels compelled to buy it, even though she really should be reining in her spending (she is the bigger earner, but her husband works too, full time). It’s partly because she works so hard (she leaves the house at 7 AM and is seldom home before 9 PM) she feels guilty. The spending is a compensation mechanism.

Dunno if that helps….

What the hell is the use of credit in the US?

This country has been the richest of the world for roughly over 50 years. It did not invent capitalism (UK did) but made it democratic stuff and “middle class” stuff. Great achievement.

The US has suffered none of the major wars its partners have made and suffered. It still has signicant soil resources of all kinds.

So whhy the hell do US people need capital injection for daily life? This is beyond my comprehension.

That makes absolute no sense except if :
- the real equity position of the US is not as described in books,
- the country has a view to take undue and unfair advantage of the dollar reserve role… And default on it.

How stupid can these people can be? Do they really think that lobbying money can forever stall long overdue reforms of their business practices? When was the last time they check the electoral map for 2008? Haven’t they notice the large number of their “natural allies” scheduled for retirement or is serious danger of being swept away during the next election?

They’d do well to remember that they can operate only thanks to the State. And there are a few bills in Congress that are just awaiting the best moment to considerable tighten the screws on them.
And in a recession climate, it’ll become extremely difficult for any politician to side with the credit card industry without jeopardizing their seat.