The "Screw the Consumer" Decade
The noose is closing slowly around the American consumer's neck. Literally.
Surrounded by a stack of bills and her checkbook register, a pretty 18-year-old freshman at the University of Oklahoma hung herself in her dorm room. No sooner had Mitzi Poole begun attending college, then she began to receive a deluge of easy credit offers. Mitzi opened up several cards and began to charge away. But, when the bills came in, a powerful depression set in and Mitzi couldn't see a way out. Even though her debts only totaled $2,500, she decided that she couldn't cope with this newfound terror: credit card debt. Tragically, Mitzi didn't reach out to anyone. She carefully laid out her bills and her checkbook on her bed and then she ended her young life.
The well-loved mayor of a small, New Jersey town, David J. Dwork secretly racked up consumer debt and eventually destroyed his credit rating. His messy personal finances eventually bled over into suspicions of corruption (without any serious evidence ever found), but that was enough to lead the Mayor into despair. In an effort to spare his wife some of the distress, Mayor Dwork left her and his small town to deal with the question of what they could've done. Too proud to ask for help, he ended his life in his mayor's office at the barrel of a gun.
In 2007, a Tennessee appeals court decided that the MacDermid family could sue Discover Card for the death of Mrs. Nina Kay MacDermid who allegedly took her own life after being harassed and threatened illegally by Discover Card bill collectors over the course of several weeks. Mrs. MacDermid had a history of spending sprees and mental illness. But, this didn't stop Discover Card from issuing her credit and then relentlessly collecting. According to the case, the collections agents of Discover illegally threatened her with going to prison and other false threats if she didn't pay her bill. Reeling from the specter of her husband discovering her bad credit and inability to deal with her debts, she overdosed on sleeping pills.
And, these aren't nearly the only Americans literally dying from debt and bad credit. A 2007 Harris Poll found that one-third of Americans feel like their financial situation has worsened in the past year and one-third felt like they can't get a grip on their debts.
Sure, consumer groups have been mewling about the fall of the American consumer and about how debt is out-of-control for decades. But something serious has shifted. Something dark and desperate is engulfing the average American and we're failing to hear them. We used to give those cries of desperation a voice -- we measured their anguish by counting the bankruptcies and foreclosures -- a decibel-meter of failure and pain.
Today, however, the special interest lobbies have stripped away our ability to even hear the pain. We have lost the canary in the coal mine and now we walk its caverns without a clue as to how deep we're descending.
In 2005, the United States Congress, at the behest of credit card giants such as MBNA, made bankruptcy all but impossible for the middle class. Bankruptcies plunged, but not because the financial health of the nation improved. Removing the emergency relief valve did nothing to reduce the pressure on anyone, (including the companies that backed the amendments to the bankruptcy laws). On the contrary, regular Americans plunged even deeper into desperation -- many now without the option of bankruptcy.
Then, the market for sub-prime mortgage collapsed in 2007. In an orgy of ill-advised lending, the housing lenders of this country provided credit to those who were living right on the edge of solvency. When interest rates rose, and when the bubble of housing values trembled, tens of thousands of sub-prime borrowers defaulted on their mortgages and this form of lending collapsed. All of this made headlines, but what didn't necessarily make headlines were the entire neighborhoods of middle-class homeowners who lost their homes to foreclosure. Thousands and thousands of Americans are loading up their possessions in their cars and driving across town to move their families into apartments. While we watch the numbers of foreclosures go ballistic, what we're not seeing are the faces of the children who are changing schools and their parents who are abandoning the American dream of home ownership amidst self-esteem-crushing failure.
These fatalities of spirit surge upwards every day, like the tickers that measure the dead and wounded in foreign wars. Only, with the credit and debt casualties, we've lost the ability, and perhaps the will, to measure them. Bankruptcy, for many people, is a lost option. Foreclosure is so rampant that the data is almost impossible to digest. We have no idea how much suffering is out there...
Credit Revolution: Path of the Smart Consumer 2007 John C. Heath, Esq., Dr. Randy Padawer, Jayson R. Orvis. All Rights Reserved. Published by Far Cliffs Multimedia, LLC