Wednesday, July 23, 2008

I've read "The Grapes of Wrath." This isn't it.

Working backwards from David Brooks' column "The Culture of Debt" led to Gretchen Morgenson's front page article in this past Sunday's New York Times titled: "Given a Shovel, Americans Dig Deeper Into Debt"

Just two generations ago, America was a nation of mostly thrifty people living within their means, even setting money aside for unforeseen expenses.

Today, Americans carry $2.56 trillion in consumer debt, up 22 percent since 2000 alone, according to the Federal Reserve Board. The average household's credit card debt is $8,565, up almost 15 percent from 2000.
Only a couple paragraphs into the article, it's soup kitchen time and "Sixteen Tons":

While the circumstances surrounding these downfalls vary, one element is identical: the lucrative lending practices of America's merchants of debt have led millions of Americans - young and old, native and immigrant, affluent and poor - to the brink. More and more, Americans can identify with miners of old: in debt to the company store with little chance of paying up.
The main difference being that instead of owing your soul to the company store for a loaf of bread, Americans can't stay off EBay. Of course, no story of woe and betidings would be complete without some down-on-the-luck tale of a woman who has been brought low by the "merchants of debt":

Earning a livable wage at Verizon Yellow Pages, Ms. McLeod finally decided to leave her marriage and buy a home of her own in February 2003. The cost was $135,000, and her mortgage required no down payment because her credit history was good.
Danger, danger, Will Robinson!

"I was very proud of myself when I bought the house," Ms. McLeod explained. "I thought I would live here till I died." Adding to her burden, however, was about $25,000 in credit card debt she had brought from her marriage.
So she purchased a home with no money down, carrying with her 25-large in credit card bills. Those unscrupulous lenders! Then illness hit and our subject re-assessed her life and financial situation. Just kidding:

She made matters worse during her recovery, while watching home shopping channels. "Eight weeks in bed by yourself is very dangerous when you have a TV and credit card," Ms. McLeod said. "QVC was my friend."
Unscrupulous vendors, selling stuff! Take a look at poor Ms. McLeod on the NY Times site: she owes over a quarter-million dollars ($237,000 mortgage plus $34,000 in credit card debts) yet she's sitting outside her home smoking a cigarette, jewelry on both arms, while a Starbucks coffee drink sits nearby. Meanwhile, personal responsibility has curled up under the porch to die.


Anonymous said...

I believe that Credit card debt stat is BS. I think they actually mean the mean credit card debt per household is $8500. I doubt they calculcated the statistic of the average debt of a household... There is a difference. The better question is what are the quintiles of credit card debt and/or the standard deviation for those more stats inclined. E.g. if there are a 100 households and 10 of them have $10,000 in debt, the average household has $1000 in debt by this calculation, when in fact, 90% of the households in this example carry no debt at all...

Eric said...

Anon, a very good point. I believe if you read through the comments attached to the article, the author re-calibrated to a MEDIAN debt of $2,400.

I used to pay off my credit card completely every month, with the exception of last month when our washing machine died and I had to get a new one. So it will take me two months to pay off my debt and it's for a required appliance, not a handbag from Fendi.

Anonymous said...

Zany budget buster Ms. McLeod is an example of the "humanizing" fanfic approach to journalism. So easy to puff up, so easy to deflate.

It's like how, during the State of the Union, we couldn't possibly understand the concepts of charity or heroism without having some guy in the balcony stand up to be clapped at.