As a means of evading creditors, many Americans are filing for bankruptcy as a result of this financial crisis. It's ironic that the unregulated credit industry is to blame for this catastrophe, but they're sending the bill to American taxpayers. In the 1970s, the United States government's total debt, including consumer debt, was less than $2 trillion. This number has now surpassed $55 trillion forty years later. Shortly after September 11, the president of the United States appeared on television and urged Americans to spend to revive the economy. If nothing were to change, we would enter a double-dip recession. After the deregulation of the credit markets, everyone decided to purchase a home and a new vehicle. Everyone is aware of the outcome, and now Americans are foreclosing on their residences and declaring bankruptcy at record rates. I do not wish to sound pessimistic, but what happened to the days when individuals saved for large purchases?
The credit market decided in the 1970s that everyone should have a credit card. The department stores came first, followed by Visa and MasterCard. Americans discovered that there was no reason to save when they could have what they wanted immediately and pay for it later. Through lease programs, the automobile industry made it possible for Americans to drive opulent vehicles that they could not otherwise afford. This resulted in a substantial number of individuals living far beyond their means. By the 1990s, everyone in the United States desired to live like a rock celebrity on an average wage. This is acceptable, but eventually the debt must be repaid.
When the new millennium arrived, it was common for housekeepers at local department stores to carry designer handbags. How does it make sense for someone earning $500 per week to tote a $1,000 purse? Credit makes all of this feasible. As the real estate market heated up over the past decade, individuals began to borrow against homes they could not afford. They took lavish excursions and purchased numerous expensive toys, including boats and luxury automobiles. Everything was normal until September 2007, when an incident occurred. I recall speaking with a real estate agent in 2005 about the froth that was being created. They told me that the price would never decline and that if I did not invest now, I would never own a home. What's amusing is that everyone is now telling me they saw it coming, but for some inexplicable reason were caught with their trousers down and are losing everything. Predicting the future is difficult, although hindsight is always 20/20.
Now, a crisis of colossal proportions is imminent. Numerous economists foresee a slowdown in the foreclosure rate, and the rising number of Americans declaring bankruptcy is merely the calm before the tempest. As there is no way to spend our way out of the created debt, I incline to agree with them. Considering that the average American has $16,000 in credit card debt and earns only $35,000 per year, it's fairly obvious how this will end. When other governments cease accepting the U.S. dollar, we will experience a moment reminiscent of the Weimar Republic. Prior to it being too late, Americans must examine their personal financial situations. If this requires consulting with a bankruptcy attorney and filing for bankruptcy, so be it. It is foolish to bury one's head in the ground in the hope that this problem will go away. It is time for all of us to engage in introspection and return to the values that made America great.""
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