Friday, May 09, 2008

The Real American Economy

No longer able to turn their homes for cash, Americans are increasingly using plastic to meet their basic living expenses. But many can't afford to pay the bills.
These days, more and more people are saying "Charge it."

Finding themselves strapped for cash and unable to use their home as an ATM, Americans are increasingly turning to credit cards to cover gas, groceries and other living expenses.

But many find themselves struggling to pay the burgeoning bills at a time when even the basic needs are growing costlier.

"Other sources of money for a lot of Americans are drying up," said Dick Reed, regional counseling manager of Consumer Credit Counseling Service of Greater Atlanta, who sees more clients with mounting credit card debts these days. "Consumers just don't have a place to go to get money. They are digging themselves into a deeper hole not only to pay for normal living expenses, but to make minimum payments on outstanding debt."
I have often said that the American Middle Class as we knew it back in the 60's and 70's has been replaced by a working class with a credit line. This report solidifies that belief for me.

Those who are truly middle class are disappearing at an alarming rate. Just like our government that is borrowing what it needs to keep running so are average Americans.
Government and agency statistics illustrate this troubling trend. The Federal Reserve reported Wednesday that Americans' credit card debt jumped 6.7% in the first quarter of this year to $957.2 billion, This spike comes despite the fact that nearly one in three banks is tightening guidelines for credit cards.

In Atlanta, debtors calling the agency in the first quarter of this year had an average of $29,300 in unsecured debt, primarily on credit cards, up from $25,700 in 2007. They spent $335 on groceries and $242 on gas, on average, in April. A year earlier, those outlays averaged only $291 and $181, respectively.

For many people, racking up credit card debt is not a choice they want to make, experts say. Not too long ago, they could have tapped into the equity in their homes through loans or lines of credit or refinancing. But this debt, which usually carries lower interest rates, is no longer as widely available with the collapse of the housing market.
This is the result of a nearly uninterrupted 28 years of bad economic policies started by Ronald Reagan. The only period that saw a reversal of fortune was during the 90's and the economic boom of the Clinton administration. There philosophy was that a rising tide raises all boats. The Republican idea is that if you give the rich enough they will be gracious enough to piss some down on you. That is a failed concept and one that was helped along by the so called Reagan Democrats. They in effect helped to destroy their own economic futures.

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