The great consolidation loan

Anybody ever “consolidate their debt”. I’ve done it lots of times. I have no problem with the concept of consolidating debt. Sometimes it’s a good move.

It’s not a good move if you do it because you can no longer make your debt payments, and you fail to solve the problems that led you into the situation.

I can attest that if you follow the previous model you will end up deeper in debt very shortly.

The US Government does not understand this concept.

The $700 billion is a consolidation loan to the US economy. Our current economic environment is a failed model. Just as a personal consolidation loan could indicate an individual is living above their means, this bailout indicates our society as a whole is living above its means.

The US Government will issue bonds to cover the $700 billion. Don’t worry. They’re not going to raise your taxes. We’re not going to get a second job or stop with the shopping binges. We’re going to consolidate.

Investors (i.e. People with money) are going to buy the bonds which the US Government promises to pay back over time. Most will end up being bought by foreign investors.

We’ll breathe a sigh of relief because we now have a consolidated loan with lower interest and payments. We’ll keep going about our business until we rack up enough debt that we need to go back to the lenders.

I can also attest that you can’t keep consolidating forever. At some point the bill comes due, and you need to make tough choices. We are obviously not ready to make those hard choices yet.

Ready or not, the problem can’t be ignored much longer.