Consumers, the government, and credit card companies are the three main passengers on a ship of fools headed for a shipwreck.
Last year, a record 1.3 million citizens of the richest country on earth filed for bankruptcy as a way to escape their debts.
Who's to blame? Credit card companies engaged in reckless and imprudent promotion of debt... consumers bent on satisfying material demands they can't afford... cultural leaders that have encouraged a lessening of the moral stigma of bankruptcy... and a legal system that allows -- almost encourages -- consumers to walk away from their obligations.
The problem is getting worse. The 1995 filings represent a whopping 28% increase over 1994. And if the economy falters, you can expect even more filings, with the potential to rock the economy and cause widespread upheaval.
If consumers are taking the advice given by credit card companies in their promotions, this mountain of debt is not being built to put food in the mouths of starving children, or even for legitimate business investment. Instead, it seems to be purchases of speed boats, mountain bikes, and luxurious vacations. It's these types of items that are contributing to a record debt load!
Who suffers when the consumers decide they would rather just not pay their debts? Of course, the costs of written-off loans are passed along in the form of higher interest rates and fees charged to those that don't walk away. Once again, the system rewards the irresponsible and punishes those who, even in this day and age, feel honor-bound to pay what they owe.
(Source: Christian Science Monitor.)