Media Mantra: "Debt is Good!" I've heard two stories in the local news in

[AP]

the last two days trying to sell this argument.

One was about Arnold's "debt retirement" ballot initiative. It's a joke. They want to sell bonds to pay off all the debt Cal has now, and are going to go into debt to do it.

BONDS are DEBT! I find it very hard to believe that Cal will get better loan terms today than they got on the debt they want to retire, and when you add in all the transactional costs, I find it REALLY hard to believe that this will save money. I strongly suspect it's a gift to the bond brokers who want to get fees on the sale of the bonds, and that it's also a big fraud desigend to create the misimpression among the people the borrowing money from the future is a smart economic strategy when you're NOT actually borrowing to make investments in the present that will have a return on their investment in the future (like schools, health, roads, small businesses, etc -- in fact, those are all the things Arnold's cutting in Cal.).

The second local news story was about Alan Greenspan who said it was good that Americans were borrowing money against the value of their homes in order to "refinance" the debt they have today. He made it sound like this was smart. It's stupid.

I just read recently that the poorest 20% of Americans (1 in 5!) is worth -$8,900. One in five Americans is in debt by probably 8 months of after tax income, on average, with little hope of ever making much more money than they make today!!!!

It sounds like local news wants to jack that % up and push that net worth farther down into the negative range. Sick.

[BR_Parkway]

1. Have you seen that LendingTree commercial?

Where the guy is listing off all his "assets" then states that he's in debt up to his eyeballs? Everytime I see that I think, there are SO many people out there that this applies to. And even worse, it seems most of them are more concerned with driving the latest model car (and going further in debt) than they are concerned about the future of this country. Whether that applies to the leadership and direction or simply the future economic crash that all this borrowing is going to have to lead to.

[IrateCitizen]

2. Worse than that are the millions who are in debt on essentials...

By that, I'm talking about dealing with exponentially-rising housing costs and the like. A segment on NOW a couple of weeks ago featured an interview with Elizabeth Warren, author of "The Two Income Trap".

She said she started the research for her book under the same premise as the guy on the commericial of which you speak. Then, the facts began to show something entirely different -- that the vast majority of people who are in debt are not in debt because of luxuries -- but to just cover basic essentials like housing, health insurance, daycare and a second car (for the two-income family). And considering the repeated attempts by the financial industry to tighten bankruptcy rules, things are only getting worse.

I live in an area (Westchester Co., NY) in which the median home price is a scant $571,000. The cheapest houses in my town go for around $365K. My wife and I make over $100K between us, but we can't imagine affording those kinds of housing costs even on our current income -- let alone if we had kids too!

[skippysmom]

5. Precisely

It seems that more and more areas of the country are becoming increasingly unaffordable. Add to that rising insurance costs, utility costs, gas prices, etc. and a middle class lifestyle becomes more and more expensive. And that's without frills.

Certainly there are people who spend money on stupid things. But the cost of everything else is really making it harder to make ends meet without going into debt.

[InkAddict]

11. Every area of the country is becoming unaffordable

to those without livable wage jobs - ask an IT professional, an accountant, a customer service representative, a factory worker! But in areas where lay-offs have been plentiful, bargains abound. The fill-in PT things that are available pay what high-school and party-time college students use to buy CDs (oops! its DVDs now) and beer (some things never change)while parents go into debt to fund their own PC images as one-time productive Americans and their widdle darlings'edumacations and transportation. (ground and air).

[ProfessorGAC]

9. If That Weren't The Case. . .

. . .there'd be no such commercial. If it applied to 100 people nationwide, there'd be no point in using that approach to get people to consolidate through their firm.

So, it has to be true that there at least several hundred thousand households in the condition of the guy in that commercial. It's the only logical explanation for that advertising approach.
The Professor

[sangh0]

10. An unjustified assumption

In this country many commercials feature men with exceptionally beautiful females. I have a suspicion that the appeal of these commercials has more to do with the viewers fantasies than the viewers real life.

[FloridaPat]

3. Rumor has it that what little growth the economy did during

they last 2 years was from people refinancing their homes, paying off their credit cards, and going right back into debt. And now that the house is mortgaged up to the hilt, the next hit will be bankruptcy. As for making the same amount of money, I wish. With all the computer jobs going overseas, there goes the high paid jobs. After being unemployed for 9 months last year, I took a job at 1/2 of what I was making. After 5 months of work, I am unemployed again, but this time no unemployment insurance. No way I will ever pay off 20% credit cards. So I am attacking them! At least it's an option.

[democratreformed]

6. Attacking them?

That sounds intriguing. Would you share?

[AP]

4. kick

[Mountainman]

7. This is the great dilema that I cannot understand

The repubs do not care if there are two Americas like Edwards talks about. One for the wealthy and one for the rest of us. But the rest of us are the consumers who spend and grow the economy.

If the incomes go down, debt is at an all time high, spending will have to go down and the economy collapses.

Do the rich think they can keep the economy going by themselves? And do they think the rest of us will just lay down and take it?

History proves that

[BR_Parkway]

8. The really scary ones are the ones just as broke as you or I

who listen to OxyRush and InSannity tell them how they wouldn't be so broke if only for the liberal taxes, the welfare state, and all the rest of the "special interest programs". And those idiots buy it, because it's so much easier to get inflamed with these buzzwords (like Pavlov's dogs) than to actually think for themselves because they'd have to admit that THEY made the decisions, THEY made the mistakes.

That our schools fail to graduate kids today who can balance a checkbook, much less have any financial savvy to say, if you borrow money to buy something that goes down in value, you will go broke, it's just a question of when. Of course, the politicians haven't learned that one, but it's still legal for them to keep printing money.

[KharmaTrain]

12. An Old Story...Try This One On...

About a decade ago I heard an economist discussing the det and how who it benefits...thus when I hear this bizzaro world prattle, I now can see how this works...here it goes:

The debt means the government must go out and borrow the money it doesn't have to meet its bills. This is done through various currency markets handled by large banks and corporations...all charging the government interest along the way.

Unlike an individual, where the large banks would carefully scrutinize your assets and income...the banks LOVE the U.S. Treasury since there's no way it'll ever go bust and needs these banks to get them the cast and or credit to pay the bills. Thus, when the debt rolls up, so does the interest owed to the banks...money owed on money lent, not the principal. Now let this debt start rolling and those payments start to become substantial.

Next let's say the government has a shortfall...it always does...well under a GOOP regime it does...thus there's a carry-over defecit that's added to the debt already accumulating for the next year. The government will make the minimum interest payments, just like someone with a credit card, and many of these lenders will let the balance of the interest owed roll into the overall debt...thus the interest missed becomes part of the overall debt which means even higher interest payments...and the principal still remains the same. Phew...amply confused yet? I sure was/am.

Long, boring econ stuff short...by having greater debt, the large banks and investment houses rake in far more in interest payments in the money they loan to the government. So if you are the officer of one of these banks or hold a lot of T-bills, yep, debt is a very, very good thing.