Exporting Mistakes

The United States has been a major exporter of popular culture for decades. We see ourselves as well as an exporter of democracy. And the recent hopes expressed by young people of many nations shows that democracy, or at least self-government in some form, is an aspirational or inspirational export of our nation, a truly significant one. Yet we have also exported something more malign: a system of economic growth that depends excessively on consumer spending and consumer credit that is  fueled by fraudulent (or at least poorly regulated) lending practices, including targeted lending at high interest rates to those unable (and so unlikely) to repay the loans. Those conditions produce a credit bubble in the economy. Like the exportation of infected beef, a tainted dependency on consumer demand has now infected Latin American nations like Chile and Brazil with the same disease that has sickened our economy: overspending, achieved through borrowing, which leads to perilous personal debt levels--much of it fueled by lenders who gain inordinately as long as they can keep the spending going and, they hope, the bubble from bursting.

In a recent article in the New York Times on the rise of consumer debt and abusive lending in Latin America, Alexi Barrionuevo quoted Lewis Mandell, a professor emeritus at the State University of New York at Buffalo. “They are learning every trick that was learned in the United States to make credit cards the most valuable part of the banking business,” Mandell said. “And unfortunately, the problems this caused in the United States are likely to repeat themselves in Latin America.”  The result will also certainly be a weakened economy and future economic stagnation for those nations, unless the problem can be rectified soon.

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Our nation’s influence in the “family of nations” is not always what we might wish it were—a transmission of all that is best in America. Instead, much of what is weak and self-destructive in our society also seems to be passed onto others. In a world made smaller by communications and globalization, infection spreads more quickly than ever.

 

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Anne Chapman
6 years 10 months ago
This article implies that other nations have no choices and no control over their own financial and banking systems. It also seems to ignore the financial meltdowns going on in several countries of Europe right now, often rooted in excessive spending and borrowing by the state (rather than by individual consumers) to support what seem to have been overly generous committments made to social welfare programs, programs that too many now see as absolute entitlements, regardless of whether or not there is money to pay for them.  While some may have failed to learn from the mistakes made in the United States,  there is also a danger that some in the United States might fail to learn from the mistakes made in some of the European economies.  Ireland may be the victim of both types of financial shortsightedness and mismanagement.  In a perfect world, the financial experts in both the public and private sectors would try to learn from one another's errors, so that at least some future problems might be averted. 
Stanley Kopacz
6 years 10 months ago
Evil apparently has a lot to do with deregulating evil people and evil practices.  Start regulating psychopathic economic institutions and we can start talking about sacrifices from the common man. Bring back Glass-Steagall and election reform and I'll consider it.  Otherwise, I'm not interested in conservative moralizing about government overspending.  Without reform of money and the election process, I don't consider the actions of our government leaders to be legitimate.
6 years 10 months ago
This article does not describe what has happened in the US.  Oh, many in the US have really extended their credit cards in the past 20 years but that is not root of the current problem.  Nearly all of the US problem is/was due to mortgages, not credit cards.  Credit cards are small potatoes compared to what happened with housing where millions of people are responsible for mortgages of several hundred thousand dollars and their homes are not worth what they owe.


This is a whole level beyond the problems with credit card debt.  In fact a lot of the current problem is the lack of use of the credit card as a large chunk of the country is holding back on spending and the malls are not doing well.  People are running scared.  Chile and Brazil are hopping places primarily because of rising commodity prices.  Also Brazil is energy independent which is another US problem as a large amount of our monthly budget is getting sucked dry by rising gas prices.
Magy Stelling
6 years 10 months ago
Wouldn't it be nice if we exported some bona fide community credit experts to teach  the middle and working poor groups just how dangerou the credit  card can be. Having liberation theology shot down by Rome I don't see much chance of that  but that could become our  most valuable export  of this century.
Andrew D
6 years 8 months ago
It is being considered that credit card is one factor that has contributed to the recession. Most Americans have used to go shopping with their cards to pay for their stuffs. Just a few years back, charge cards were the weapon of choice for most American customers. Since the Great Recession of 2008, however, the use of charge cards has seen a rapid decline in the U.S. And while that might be sensible and accountable from the perspective of finances, the good sense of these consumers does have an adverse impact on an unstable economic climate that runs on credit. That is a sensible policy from the standpoint of personal finances. But in the large picture, it could well hurt the economy. Article source: Economic growth depends on spending and paying bills on time.

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