The New York Times is making a big splash today about their multimedia feature on consumer debt. The article blames the financial industry of usury:
Ms. McLeod, who is 47, readily admits her money problems are largely of her own making. But as surely as it takes two to tango, she had partners in her financial demise.
Consumer debt is not like tango. There is a free market where consumers have several choices – the most important one being not living beyond their means. To be fair, some people are indeed the victims of misfortune. Medical emergencies are the single biggest cause for bankruptcies in America. But that is no excuse for this mountain of debt that the American people have piled upon themselves. Spending more than what you earn using credit cards, buying more house than you need, more car than you really need. Shoes and handbags? Come on. The situation in Britain is probably no better. And emerging markets are also beginning to ride the wave of easy credit.
Don’t try to blame the credit card companies and their exorbitant fees and interest rates. And don’t try to fix these problems with regulation.
But with so many borrowers in trouble, some bankruptcy experts and regulators are beginning to focus on the responsibilities of lenders, like requiring them to make loans only if they are suitable to the borrowers applying for them.
Why should the government step in with regulation? The government is stepping in to bail out the people and the institutions that, under a free market, would have to deal with the consequences of their actions.