Monday, March 15, 2010

Deep Slices Of Trouble

The last ten years have not been easy on Americans, psychologically. We've had our innocence and hubris shattered, a moron President who tried to falsely raise our spirits and hopes by raping two other nations, another President who promised hope and change but who has had troubles not only with the "loyal" opposition, but the morons in his own party who can't pass legislation if you spot them 60 votes in the Senate, and two economic crises that threaten the very underpinnings of what it means to be an American: an unlimited future.
And now, we're starting to see those crises work their way into our bloodstream. Literally.

But it's America that has become the world's preeminent fat-making machine. To dismantle it we need a coordinated, comprehensive plan of attack, one that pairs individual responsibility with a social construct that fosters good nutrition and a healthy lifestyle. We need to be surrounded by food that makes us well, not sick. We need schools and workplaces that reward us for exercising our bodies, not just our brains. "If you want people to make the right choices, they need to have the right choices to make," says Dr. William Dietz, director of the CDC's Division of Nutrition, Physical Activity, and Obesity. We need forceful and well-enforced policies, a government that invests dollars in improving the diet of school kids and puts limitations on the advertising that targets them. We need Americans to perceive obesity as a personal threat to themselves and to their children, not as somebody else's problem. We have a long way to go.

In New York State, there is a brutal ad campaign going on now that centers around the so-called "sugar tax," a tax on soft drinks and fruit juices that will be assessed based on the amount of sugar in a drink. I support this tax, just as I would support a tax on beer, wine, guns, tobacco and gambling if these did not already exist. The role of government is not to protect its citizenry from enemies foreign and domestic, and among those domestic enemies are corporations whose love of profit countermands their common sense and love of their customers.

Corporations spend billions of dollars a year on research and development of products that are blatantly unhealthy for us. While sugar is energy, too much of a good thing is no good. The problem is, drinking a sugary soft drink makes us feel good. Hell, they are marketed to us as life-improving and mood-altering substances, and there seems to be precious little difference from how a soda is sold to you and I, and how a prescription drug is sold to us. And drugs are controlled substances. Maybe it's time we were honest about soda and candy.

And because they make us feel good, we turn to them in times of crisis and need. Which brings me to item 2:

The most common assumption is that people are irresponsible and that they are not wise about their money. It's basically victim blaming … an attempt to shift the blame onto individual consumers. The other point of view on this issue is that it is primarily the fault of predatory lending practices--the "evil" credit-card companies. I'd say there's some truth to both views, but it's not that simple.

One of the most important factors is the easy availability of universal credit, plus the fact that the marketplace [is open to us during] every waking moment. Because purchases can be completed so quickly, they're very unlikely to be interrupted by a prudent thought. A third reason why people are going broke is the basic insecurity of our economy. If you have a consumer society where no one is saving—where no one is encouraged to save—and millions are in debt [and then] you hit them with a jolt to their income, they're instantly going to be in trouble.

That article, written in February 2008, has become more and more true as the months has unfolded. Right now, the crisis lurking in the tall grass is consumer credit debt: car loans, student loans, credit cards. Americans have worked hard to bring all of these down, but as incomes decay and erode due to inflation and poor economic conditions worldwide, more and more of these are going to go into default.

The best estimates of consumer debt runs around $2.5 trillion dollars, and this is debt that is secondary to things like mortgages. This represents car loans, credit cards, lines of credit, and payments on those along with mortgages equal about 13.1% of after-tax income to Americans.

The real problem lies in the fact that a substantial number of Americans make absolutely no dent in their debts: they pay the minimum balances. This type of debt is intended for short term fixes, but instead have become long-term obligations that must be paid off at some point, but not today. And they don't go away if you lose your job. There's no house to walk away from and let the bank have.

Much has been made of "underwater mortgages," mortgages where the balance owed is more than the resale value of the house securing the loan. But think about this: of that $2.5 trillion, almost none of it represents an asset that can be sold to reduce the indebtedness. It's all money that's been pissed away to pay for food, clothing, a car, toys and games.

In other words, you'll be paying in 2030 for a vacation you take this year. If you're still able to. And mind you, that's not to say we as a nation have been completely irresponsible: much of this indebtedness flows from the un- or underemployed, people with catastrophic illnesses, people who divorce, people who have unplanned pregnancies. People who meant well, but life threw them a curevball.

So if you've been wondering why all of a sudden, your "friendly banker" has been charging you fees for things you never paid for before, or has been working hard to make it deliberately harder to pay your credit card on time so he can collect late fees, or has been urging you to just spend more, well, this is why: he has to mine the good credit in order to cover his likely losses on the bad.

That's not going to improve the mindset of the people of this country. We're heading to a crisis of confidence, and in crisis, as I've discussed before, comes along the black horse.