Are We Living In Economic Denial?
When a young family used to purchase a home, 10% down payment was a must. A young adult with little credit would struggle to get a credit card. Buying a car with no money down was unheard of.
Times have certainly changed. Today, we expect all of these things with no strings attached. We can buy a huge home with no money down, and thanks to the availability of credit cards, we can purchase almost anything at a moment's notice. The average person owes thousands in credit card debt.
We've gotten used to this. And so have businesses and the government.
I'm shocked, as I've gotten to know more business owners over the years, at how many businesses survive from month to month, sometimes day to day. The names of some of these companies would surprise many folks. Credit keeps most of these firms in business.
The availability of credit is certainly not a bad thing. Credit helps businesses hire new employees and sometimes pay their current staff. Credit is almost always the only way a small business can grow into a mid-sized firm.
But the country (citizens and government) does need to understand the risk of loose credit and work to find a fine line between offering credit for everyone and grinding the economy to a hault.
This presidential election may be a good start. The country is broke and deep in debt. Who is the best candidate? Out of all the questions Sen. Obama and Sen. McCain are being asked this election season, the most important question may be this:
If you sent Sen. Obama and Sen. McCain to the grocery store with a list of groceries and a $100 bill, who would come back with the most cash?
As far as our country is concerned, the answer to that question may be the best answer to the question, "Who should be our next president?"
--Ron Ameln, SBM