Proverbs 22:7 says the borrower is servant to the lender. In Bible times, a man unable to meet his debts sold himself (or a family member) as slave to repay. Although he was not made a slave on the day he borrowed, the proverb's author rightly asserted a borrower's status as servant from day one.
We no longer take debt so seriously. Who cares about the final cost? Credit cards finance everything from vacations costing thousands to lunch at McDonald's. "Buy now and do not pay until 2011." Or, "Just $29.99 per month!* *On charge card. APR 27.3%, $120 annual fee, $30 late fee."
Sufficient credit pushes aside restraint. Insufficient income prompts borrow more rather than spend less. When credit runs out and running from creditors becomes unpleasant, bankruptcy provides an often employed escape from debt far less painful than slavery and debtor's prison.
Government leads the way on borrowing. Taxpayers know but seem unconcerned about footing the bill for horrifically huge bailout packages. As with individual debt—and especially with panic-induced debt—who cares about the final cost? Why worry now about how to repay? The present goal is avoid a depression, regardless of the price tag.
In the meantime, where does the money come from? Exactly who buys all those T-bills backed by the U.S. government? Even if nervous stock market investors switch to T-bills, do we surmise there are enough U.S. dollars to finance the billions being handed out?
Sighs of relief for bailout dollars cover pitches of "America for sale" on the global market. A plummeting dollar means rock-bottom prices for foreign investors. Shares of the good old USA are as available as corporate shares sold on the stock market.
But unlike stock market issues, the U.S. isn't using funds for capital investments which will pay dividends. We're simply doing at the highest level what we've been doing for years at the individual level: borrowing money to refinance the debt of indulgent choices so we can again breathe easy, while bankruptcy lurks at the door.
Foreign investors may not be as willing to grant the clemency allowed by bankruptcy. On a not too distant date in the future, they may actually choose to exercise ownership rights.
How? Maybe our debt will be allowed to ride in exchange for our support on a U.N. resolution. Painful economic sanctions might lie in the future. Eventually, we could face compromise of national sovereignty.
All this is purely hypothetical. More debt could work. Perhaps the borrower need not be servant to the lender.
Right?
Feedback invited. Post to BuildingHisBody.com "Comments" or e-mail to BuildingHisBody@gmail.com. Copyright 2009, Anne Lang Bundy
Bless you.
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