Monday, October 29, 2007

Will you be Paying for that with Cash, Check, Charge or 7 years of indentured servitude?

You want something you don't deserve or can't afford? No problem! Just get no down payment mortgage thanks to non existent lending standards, or better yet, put it on the credit card!!

Millions of Americans are so cash strapped that they are now using credit cards simply to cover Gasoline and Food because their income does not even make enough to survive. Now it is to the point where people are paying their mortgages with credit cards. Check out this article from Yahoo:

In August 2006, Reeves and her husband bought a $214,000 home with almost no money down, leaving them with a monthly payment of $1,636 -- higher than they planned on, especially with her husband's furniture sales job largely commission-based and business not good due to the U.S. housing slowdown.

An attempt this spring at refinancing with another lender fell through, leaving them behind on payments and struggling.

But as part of her efforts to avoid defaulting on the mortgage, Reeves said she has "maxed out" all her credit cards, spending to the limit on basic needs. "Now all I'm doing is making the minimum monthly payments."

Welcome to the new paradigm in America. Doesn't it ring eerily familiar to the coal mines of the 1800's, and that song sixteen tons by Tennesse Ford.
You load sixteen tons, what do you get?
Another day older and deeper in debt
Saint Peter don't you call me 'cause I can't go
I owe my soul to the company store
Miners were usually paid monthly. By the end of the month, they owed the company for the company house they were living in, for the tools they used to mine, for groceries to feed their family, and for any doctor bills. Miners had no choice but to buy from the companies. They were paid in scrip, not real money and this could only be spent at the company store.

Naturally this enabled the company to charge the miners whatever they wished. Most miners with families were constantly in debt to the company. When the miners did get paid at the end of the month, if there was any money left after they paid their employers, it was certainly not enough to last them another month. So it was a viscious cycle, and the next month, they again had to pay the company first and were lucky to have anything left for their families.

Credit cards are the new "miners script" my friends, allowing people to go deeper in debt just to buy the basic necessities to survive. This can't go on forever, and when it does finally reach critical mass its going to be very, very bad.

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