End of the Intermediate Trend?

[Grieve]

I guess that's where I'll always disagree with most people here. I believe that, once protected from fraud (labeling a snake as a pet rock), the onus is on the consumer to be an informed consumer. Most people with credit card debt are not in that position because they didn't read the fine print. They're in that position because they knowingly spent more money then they had. The fees and increased rates certainly exacerbate an already bad situation, but they are not the root cause.

Think about it. Should I, knowing nothing about classic cars, go and spend 100K on some sports car from 1950? Of course not. I should look at consumer reports, ask a friend who is an expert -- or better yet, refrain from diving into an area where I don't have even the basic knowledge to decide if I'm getting value for my money. This is essentially what happened with these exotic financial products. People just didn't understand them. As always, back to Buffet, he turns down deals that he doesn't understand. That's why he only took a 25% hit through this crisis instead of a 99% hit like many consumers of exotic assets (i.e. that town in Iceland).

I would agree in a qualified way. Far too many people live beyond their means, take risky bets, or don't consider the consequences of things like job losses, falling house prices, etc. And that makes it all the more frustrating for people who are smart and cautious with their finances, when the reckless people get bailed out or helped (all the people getting mortgage and/or credit card balances written off, or interest rates lowered, etc).

However...I still put a lot of the blame on the credit card companies, mortgage companies, retailers, and so on. If you offer a drink to an alcoholic, it may be their decision to take it, but shame on you for doing so. And these companies not only offer, they cajole, beg, badger, and generally don't take no for an answer.

The same principle for fast food joints, or cigarettes. Yes, people should know better, but they don't. People are stupid and uneducated, and looking for the easy option, whether it's a Mickey-D's burger, no-payments-no-interest for a year, or a mortgage where they pay next to nothing for 3 years. Maybe the answer is better education, maybe it's more regulation, but let's face it...people aren't going to change their habits without some major catalyst.