Sinking lifeboats
My post last night made me think some more on the subject of how poverty will increase as energy costs increase (via peak oil).
Assuming there's not financial collapse or hyperinflation, the wealthy will always be able to afford what they want to do. However there is a large middle-lower class that is barely making ends meet right now between debt and cost of living. I suppose an economic downturn would first have the effect of increasing the number of bankrupsies as people with unpayable debt will try to escape.
We all can agree individual debt increases have been irresponsible over the last 5 years, and creditors deserves SOMETHING if people can't pay, so it makes sense to not make bankrupsy "too easy" and if people have some ability to pay perhaps they should be obgligated to continue paying on their debt.
Last year my dad declared bankrupsy with something over $30k in credi card debt, some of it held over from more than 15 years ago, kindly making minimum payments all this time and adding a little more here and there. It's astounding to me to imagine. Now its all cleared and he is free.
It is clear that debt risks becoming a system of slavery. If debt is protected, and opportunity limited, people in debt can be in a position of basically working FOR those they own money to, whom can set the pay rates low enough to take years to cancel the debt. Well, similar sorts of arrangements happen in regards to immigration - in exchange for transporting YOU to a place of better employment, you will promise either money or a fixed period of time you'll work for me.
Anyway, just trying to imagine how things might change under harder times. Obviously individuals are most vulnernable while people with family may be able to gain help to escape exploitive relationships.
Already I've considered this with family and credit card debt. If a person is "suffering" under high credit card debt and interest, I can pretty easily help by paying the debt and having interest free repayments given back to me. All good and well "empowerment". However if the person I'm helping isn't wise, he can get himself back into debt WHILE still paying me, and so I have a risk that I am enabling this person from facing their irresponsibility. Well and as well I REWARD those who lure people into debt by repaying it while I'm talking on the responsibility of getting repaid. So not even an altruistic motive is enough to make a difference.
I can imagine "in the olden days" before credit cards, people lacking means or self-discipline had no access to credit and had to save for what they wanted, or borrow from friends or family. As horrible as this might feel, at least they were "protected" from exploitive debt. Now we're "freer" to get in debt, and "empowered" to get ahead on our own, if we make good decisions.
I certainly worry about freedom to be exploited. I know words are easy, and there's always "mutually gainful" agreements. Debtors trade future time for opportunity. Lenders trade wealth for risk to gain or lose wealth.
I suppose in 1929 when the stock market crashed, mostly those who borrowed to invest were most in trouble, while the rest lost as well, but maybe not everything. I don't know, but I'd expect there's more overall debt now.
Well, all these speculations are beyond me how things might play out. I can "feel for" the lenders as much as the borrowers. At least I recognize risk and lenders are far from secure they'll ever get back what they started with. Still at least they can afford to lose.
Assuming there's not financial collapse or hyperinflation, the wealthy will always be able to afford what they want to do. However there is a large middle-lower class that is barely making ends meet right now between debt and cost of living. I suppose an economic downturn would first have the effect of increasing the number of bankrupsies as people with unpayable debt will try to escape.
We all can agree individual debt increases have been irresponsible over the last 5 years, and creditors deserves SOMETHING if people can't pay, so it makes sense to not make bankrupsy "too easy" and if people have some ability to pay perhaps they should be obgligated to continue paying on their debt.
Last year my dad declared bankrupsy with something over $30k in credi card debt, some of it held over from more than 15 years ago, kindly making minimum payments all this time and adding a little more here and there. It's astounding to me to imagine. Now its all cleared and he is free.
It is clear that debt risks becoming a system of slavery. If debt is protected, and opportunity limited, people in debt can be in a position of basically working FOR those they own money to, whom can set the pay rates low enough to take years to cancel the debt. Well, similar sorts of arrangements happen in regards to immigration - in exchange for transporting YOU to a place of better employment, you will promise either money or a fixed period of time you'll work for me.
Anyway, just trying to imagine how things might change under harder times. Obviously individuals are most vulnernable while people with family may be able to gain help to escape exploitive relationships.
Already I've considered this with family and credit card debt. If a person is "suffering" under high credit card debt and interest, I can pretty easily help by paying the debt and having interest free repayments given back to me. All good and well "empowerment". However if the person I'm helping isn't wise, he can get himself back into debt WHILE still paying me, and so I have a risk that I am enabling this person from facing their irresponsibility. Well and as well I REWARD those who lure people into debt by repaying it while I'm talking on the responsibility of getting repaid. So not even an altruistic motive is enough to make a difference.
I can imagine "in the olden days" before credit cards, people lacking means or self-discipline had no access to credit and had to save for what they wanted, or borrow from friends or family. As horrible as this might feel, at least they were "protected" from exploitive debt. Now we're "freer" to get in debt, and "empowered" to get ahead on our own, if we make good decisions.
I certainly worry about freedom to be exploited. I know words are easy, and there's always "mutually gainful" agreements. Debtors trade future time for opportunity. Lenders trade wealth for risk to gain or lose wealth.
I suppose in 1929 when the stock market crashed, mostly those who borrowed to invest were most in trouble, while the rest lost as well, but maybe not everything. I don't know, but I'd expect there's more overall debt now.
Well, all these speculations are beyond me how things might play out. I can "feel for" the lenders as much as the borrowers. At least I recognize risk and lenders are far from secure they'll ever get back what they started with. Still at least they can afford to lose.
posted by Ares Olympus at 9:01 AM
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