Credit Card Debt

We haven't seen the worst of this financial crisis yet. Now Germany, the European country with the broadest remaining manufacturing base, is officially in a recession. The banks, which were supposed to be relieved of their "toxic" mortgage paper are still holding onto it, because Treasury Secretary Henry Paulson has switched course, and decided that the US government is not buying those bundled mortgages anymore.

It's a mess. But it will get worse, because consumer credit card debt hasn't hit yet.

Many people borrowed money at astronomical interest rates from their credit card companies, forgetting, because it was just so damned easy to borrow that money, that credit card companies have some added protection. In 2005 the Congress amended the bankruptcy laws to make discharge of credit card debt much more difficult. The majority of folks file for bankruptcy because of medical bills and unemployment. Now we have a law that makes starting over nearly impossible. Yes, folks didn't know how to stop buying what they couldn't afford, that flat screen television, Coach purse, or a new car. But neither could the US government, states, and practically every corporation in the country, if not the world. Advertising works and people were constantly bombarded with the same message: Buy, buy, buy. Remember just two weeks ago, AIG executives were retreating at a luxury resort in Arizona, right before they asked for more bailout money.

With homes in foreclosure, many people are just walking away. But with credit card debt, that isn't possible. And starting over with massive debt payment schedules eating into weekly paychecks, if people even have them, makes starting over dismal, if not nearly impossible.

Now this isn't the consumer debt that Paulson is worried about as he decides singlehandedly what to do with the bailout money changing course once again.

This doesn't sound right because it isn't. No one should have this much power. And rather than worrying about whether consumer credit is available, once again, nothing is being done to assist the individual family.

With Christmas right around the corner, stores will feel the pinch of credit card balances, unemployment, and the failed bailout of banks. Who can afford to buy anything? Our friends have decided that we are giving food to the food banks rather than exchange gifts this year. And we are all employed still. And the banks, well, yesterday I was at Bank of America, and the small business specialist didn't know that the FDIC now insures interest-bearing deposits to $250,000. I left the bank wondering if anyone has had the time to train the folks who are actually dealing with consumers and small businesses.

It's a mess. I have the distinct wish that Bush resign (well, that has turned from impeachment to resignation ver the last eight years) and let Obama and his team take over before it gets much worse. Then I worry more. Will we crush this mortal man with our expectations?