Mugged by the Moralizers

[Gerald]

“How many of you people want to pay for your neighbor’s mortgage that has an extra bathroom and can’t pay their bills?” That’s the question CNBC’s Rick Santelli famously asked in 2009, in a rant widely credited with giving birth to the Tea Party movement. It’s a sentiment that resonates not just in America but in much of the world. The tone differs from place to place — listening to a German official denounce deficits, my wife whispered, “We’ll all be handed whips as we leave, so we can flagellate ourselves.” But the message is the same: debt is evil, debtors must pay for their sins, and from now on we all must live within our means.

And that kind of moralizing is the reason we’re mired in a seemingly endless slump.

http://www.nytimes.com/2010/11/01/op...ml?ref=opinion


Note:By PAUL KRUGMAN
Published: October 31, 2010

[Buddahaid]

I certainly prefer being liquid. Business doesn't like customers acting like businessmen. (bad form, you see)

[GoldenRivet]

Debt is not a bad thing... So long as it is responsible debt.

At $30K a year you know you can't afford that $270K house but you borrow anyway. That's irresponsible debt.

As a bank, you know theguy doesn't make much money but your willing to give him a break... So you require no downpayment and offer attractive rates. Knowing full well that the mortgage payment alone is worth over 80% of the monthly income... That's irresponsible lending.

[Blood_splat]

Soon will be able to get loans from Bank of China.

[Gerald]

Debt, are they most cases the best thing on my own experience, assuming it would not involve major renovation items or luktrativ investment, and you get a good settlement with the bank as it is to gain..

[Penguin]

I don't make debts - the only exceptions being a pub visit or when buying real estate. Can't afford something? Tough ****, either save or buy something cheaper or used. The only winners in this debt game are the banks.
I expect the same from my government - of course without my personal exceptions. Wait, maybe a visit to the pub would do them good .

[Gerald]

Do you think it is better to buy or borrow on credit?

[Penguin]

buying > passing on > borrowing

I must admit that the swedish banks have some nice conditions when you buy a house there. However when I was there last year to get a loan they were astonished that we wanted to pay it back to become debtfree one day .

[mookiemookie]

Originally Posted by Vendor

Do you think it is better to buy or borrow on credit?

There's a place for both. Putting a takeout pizza on a credit card is stupid. Taking out a 30 year mortgage at 4.50% on a home is sensible. Buying furniture on one of those "no interest so long as it's paid in full in 12 months" is a nice way to get what you need. Going on shopping sprees for video games, clothes and other luxuries is dumb.

People need to be more disciplined and thoughtful of how they use credit. Just because it's available, doesn't mean it's a good idea.

[Gerald]

There is sweet music to my ears,

[Gerald]

Originally Posted by mookiemookie

There's a place for both. Putting a takeout pizza on a credit card is stupid. Taking out a 30 year mortgage at 4.50% on a home is sensible. Buying furniture on one of those "no interest so long as it's paid in full in 12 months" is a nice way to get what you need. Going on shopping sprees for video games, clothes and other luxuries is dumb.

People need to be more disciplined and thoughtful of how they use credit. Just because it's available, doesn't mean it's a good idea.

especially when you plan to rent a car or book a flight,so flexibility is good if you have the possibility

[August]

Originally Posted by GoldenRivet

Debt is not a bad thing... So long as it is responsible debt.

At $30K a year you know you can't afford that $270K house but you borrow anyway. That's irresponsible debt.

As a bank, you know theguy doesn't make much money but your willing to give him a break... So you require no downpayment and offer attractive rates. Knowing full well that the mortgage payment alone is worth over 80% of the monthly income... That's irresponsible lending.

Well I could understand if not forgive a buyer not understanding all the ramifications of what they're getting into. The sheer amount of paperwork generated by a mortgage is pretty daunting.

The bank on the other hand knew exactly what it was doing. They were granting those loans because they intended to sell the notes to someone else before the buyer inevitably defaulted. That's more than irresponsible, it's predatory imo.