A common complaint this spring is the credit squeeze so many of us find ourselves newly tethered to. Whether the headlines are exaggerated or not, Big Debt can feel disastrous, especially to those who resist changing their spending habits. With big debt threatening families, individuals, and small businesses, is the threat enough to force us into action, or just into more complaining?
“Action” doesn’t mean blaming politicians. Blaming is an excuse for not acting.
Economists cite two big causes for today’s credit crunch: very low credit costs in the last few years meant we spent way too much, more than we could really afford, and now the bills are coming in – on top of increased prices everywhere. Second, wages have not kept up with these rising costs.
The crunch: bills for our credit-purchases of the past five-six years, plus the higher prices of each day. Add slow growth in wages.
Although our corporate-run economy can raise daily prices (as it’s doing); we the people have only strikes and job-actions, which kill the calf, when used against the small businesses that employ most of us. Or they’re made to look useless thanks to a media that’s a part of the same corporate world. No one twisted our arms on our past buying sprees, and these are now coming due at the same time as we face higher daily prices.
Those super-low interest rates – unsustainably low – surely must have made a few of us consider that interest rates cannot remain at 1, 2, 3, or even zero percent for long without crashing the banking system, right? It should have been magnificently clear that we could not, really, buy big homes, fancy cars, or take expensive holidays – without having to pay them off?
Yet so many of us indulged in those luxuries. Many say they felt the luxuries were “owed to them”, so exhausted from work, from raising a family, working a farm, or creating a little enterprise – all the things we do, our parents did, and our kids will do. We must have known that self-indulgence is not the best response to exhaustion, as lovely as it feels. Again, this is not moral; it’s an economics issue. We knew we would have to pay for these purchases eventually, if we’d given it some thought, and then with higher interest rates. We knew, then and now, that banks do not have souls; they have bottom lines; they are profit-generating machines, not friendly helping-hands.
That last point in today’s debt crunch: insufficient wage growth. We are not getting wage increases to cover our earlier low-interest purchasing, or even today’s rising costs. Small businesses are in the same boat as households: high costs, static incomes. Corporate wage increases do not generate profits (except in the extremely long run). Remember, we do not live within a cooperative economic system.
And yet some guy’ll come along and blame all this on “Trudeau”?
