The Cure

Never Enough and his best mate called Why Can't I be You are in a bit of trouble these days. Money is tight. The big boys on the block have gone bust and sadly, these boys do cry. Lehman has gone kaput in a whimpering pile of corporate dust; J P Morgan; Goldman and the rest of them all went weeping on the collective shoulder of the American Congress for bail-outs from their respective silly trading sprees that collapsed with the overstretched mortgage loans that were embedded in their fantastic investment instruments. And now, it seems from reports in the NY Times that student credit is becoming something beyond a stress headache too. One does detect something of a bad habit somewhere in all the unravelling calamities.

Apparently, banks such as big boy Bank of America reach cosy deals with universities to offer credit cards to students. Fair enough, let a young person learn to use credit responsibly. That is the reassuring mantra of such arrangements. Sadly, the opposite outcome is more likely as is evident from past experience. Students end up with substantial ($2600 on average) debt on such cards and responsible spending flies out the window at card activation. It would be interesting to analyse the items on these card accounts to check for necessities as opposed to luxuries. One is inclined to bet on the latter being the predominant share of items. Bad habits often start from a young age and the worse case extrapolation resembles something like the current financial fiasco facing the USA and beyond: Endemic overspending and financial gluttony.

The UK public in particular is in a similar boat and developing countries such as South Africa and India have to restrict available credit in order to wean spending addicts in the growing middle class, facing an alarming increase in private insolvencies.

The cure? Well, my grand parents never had credit cards and never had shortage either. They never lived high but had their own homes and some money to spend on treats for their grand children over Christmas. In times of crisis it may help looking back at past wisdom. Alas, in today's mind such nostalgia is simply the wrong number. But it may just save us from overheating this world in more than one way.

[With apologies to The Cure].