As a proposed method of alleviating the outstanding credit card debt account balances that threaten the financial security of so many American families, the prospect of a debt settlement venture initiated by the federal government has inspired the most delirious fantasies of discharged burdens for underemployed and over leveraged heads of household slowly sinking beneath the rising tide of consumer obligations. According to this line of thinking, our elected officials and those entrenched bureaucrats controlling fiscal policy within the United States would arbitrate an effective credit card debt settlement negotiated upon a massive scale between borrowers and lenders, but this remedy hardly comes without its own share of problems that deserve to be appreciated and analyzed with full recognition of more than just the political momentum of the moment.
While the enormous popular appeal might well stem the burgeoning social unrest that has recently spiraled around all financial institutions and, more to the macro-economist’s point of view, while the subsequent spurs toward consumer confidence may force spending sprees sufficient to create an enduring expansion with job creating teeth the consequences of issuing a federally mandated program of debt forgiveness upon even a limited scale would still play havoc with the financial markets. The commercial lending infrastructure behind credit card debt accounts has become so thoroughly interconnected with the entirety of the United States economic apparatus that any seemingly slight redressing of just those balances already most at risk still threatens the stability of untold other industrial interests whove invested in those securities as a fundamental asset.
“If you want to look at things a certain way, the folks owing the money wouldnt be able to pay anything back anyway,” said Carter Ewell, a senior financial policy analyst for Fredrickson Beach. “From that perspective, the lender doesnt lose anything, theyll get to take advantage of the same Internal Revenue Service breaks as before, and were all better off by helping the lowest members of the food chain avoid bankruptcy for credit card debt they never shouldve been allowed in the first place. Throughout the last couple decades, as the major lenders kept letting their eligibility standards shift and consumers with bottom of the barrel credit scores managed to land five figure charge accounts on a wink and a smile, we all knew there had to be a decisive end to the gravy train sooner or later. Whatever crazy profit margins the super banks were operating under, every scheme eventually reaches a tipping point that forces a market withdrawal; we just never thought it would come this quickly.”
The current drive for credit card debt relief assistance differs substantially from the genuine demand for mortgage debt settlement provisions, Ewell hastens to explain. “With equity loans, there was the dueling forces of criminally under regulated lending authorities skirting by on the tails of governmental subsidies AND this feverish real estate bubble of wild speculation throughout the country that modern market forces werent supposed to allow. As fiscal disasters go, that was a sort of perfect storm, and, in order to combat the glut of foreclosed properties weighing down appraisal prices, the feds really had no choice but to step in and offer support. Credit card debt reliefs a whole other story. Whatever you might think about the rewards or pitfalls of debt settlement, everyone involved in the process knew exactly what they were doing throughout the process of addicting Americans to shopping by plastic.”
