November 6, 2013

By Margaret H. Johnson

Lots and lots of press coverage about debt these days. Recently the United States avoided default on their debt load. What is of particular interest is the predicted devastation to the global economy if that should have happened. What isn’t mentioned is how individuals and families face a very similar crisis if their debt loads reach a ceiling and how their world would collapse if they should default on their debt loads.

You see, we live in a world of debt ceilings. At any given moment, a nation of debtors – individuals and families - could reach their debt ceilings and fall into a nasty place where you are ostracized, criticized, disenfranchised and stripped of your dignity.

When a government vacillates between solvency and insolvency – and struggles with a mountain of debt that just keeps getting bigger and bigger – it sends all kinds of mixed messages to a nation of debtors stickhandling their debt loads.

It tells us that we are all navigating the treacherous debt stream of unending payments and finding it next to impossible to pay down the debt -- at least the middle and lower income groups. In a way, this lends legitimacy to debt problems. If the government can’t pay its bills, who can?

It also tells us about the trauma of default. It’s a frightening experience. People way down the economic ladder from a government that leads one of the most powerful countries in the world, also run, scurry, conduct meetings and negotiate with creditors (family members) and consult financial experts  to avoid default. In fact, many many people borrow more and more from friends and family to avoid default – but, unlike the United States, these hysterical efforts fondly referred to as borrowing from Peter to pay Paul, most often end in default and catapult the family into crisis where their fears of unpleasant collection practices, of losing their credit rating and, in some cases losing assets, come true.

Another item unmentioned was how the US government drifted into the turbulence of an impossible debt problem without creditor pressure or the relentless pursuit for payment by debt collectors. Instead it has been evolutionary and dates back to the 1980s. Once trapped in an upward debt spiral, the United States government has not been able to break free.

Canadian families have similarly been imprisoned by a dependency upon consumer credit that goes back to the 1970s. Each and every year since 1975 they have borrowed more and more – from $20 billion in 1975 to over $500 billion in 2013. They have been unsuccessful, or is it you and I that have been unsuccessful, in paying down the debt.

The question on the table is why. Why has this happened? Without going into the many complicated explanations that generally point the finger at someone else for causing the constant usage of credit, we cannot ignore the high cost of housing and raising children much longer. It’s not just a question of uncontrolled spending by out of control consumers, but rather much deeper. The historical roots of consumer debt and the dependency on credit tell us that we have been subsidizing the cost of living, of inflation and taxation, by using the credit system (not unlike the US government) for almost 40 years and that eventually we hit a ceiling, a debt ceiling.

Douglas Rushkoff, (PHD) a world-renowned media theorist, recently published a book, Present Shock interestingly, if not boldly suggests that, through technology and the collapse of narrative during the latter half of the 1900s, we no longer look to the future for answers but only the here and now. We live in and for the present moment. He convincingly uses reality television and digital games as present day substitutes to literature, books and traditional story telling. We no longer need a beginning or and end but rather just an unscripted present.

Sound familiar to anyone? Sounds pretty much like the instant gratification culture to me. You know, live every day to the maximum – enjoy life now, get that home equity loan today or gold platinum Visa or MasterCard, don’t worry about the future?

Yes there is a parallel to Mr. Rushkoff’s thesis, one that involves borrowing from the future to pay for something today. The only problem is that governments and consumers are hitting debt ceilings that threaten the global economy.