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The Future of Credit: Who Will They Lend Money To?

OK, this one is going to take a little explaining first.

A short time ago I merged this blog with another one. In order to ease the process of merging the two I decided to let most of the original content on this blog be deleted and replaced with content from the other blog, which was a lot older and had more content.

The problem with that is that there were some old posts from the original version of this blog that I want to follow up on and without the original post, the follow-up makes less sense.

So, I decided to dig through my old backup files and I found a copy of the post I wanted to post a follow-up to. Here it is:

Originally posted on January 28, 2011.

It’s no secret that this economy sucks. The politicians and other scumbags keep trying to keep everyone from panicking by telling us that things are getting better, but from where I sit, there has been no “recovery” and I don’t see one in the cards yet.

At this point I’ve given up paying attention to the numbers that are parroted by the state-run media since they’re all just towing the line for the politicians. I like getting my information from the source, you know, the real “grass roots” – in other words, my fellow citizens.

What I’m hearing is not good. I know a number of people who have stopped paying their credit card bills because they simply cannot afford to. When someone loses a job do you suppose they’ll be likely to put their credit card payments ahead of their mortgage, rent or grocery bill? Probably not.

This, of course, does not make the big greedy banks very happy. I mean come on, they’ve worked hard lying, cheating and stealing their way to the top! And if you believe they’re nothing but a bunch of nice people trying to make a buck, you may as well just stop reading this now and go back into your trance in front of the football game or latest episode of Jersey Shore.

What’s interesting to me is how relentless the bank employees are when it comes to recovering money for their bosses. I mean really, who can sit on their ass all day calling to harass people about unpaid bills for $10 an hour? More on that later, but it’s pretty pathetic if you ask me.

Anyway, the main point of this article is to speculate about the potential consequences that consumers may face if they are unable to pay their credit card debt. Please keep this in mind: I am not a lawyer and this is not legal advice. It is all pure speculation on my part. I guess you could call this an opinion piece.

So what’s the worst thing that can happen to you if you don’t pay your credit card debt? As far as I can tell, being hauled into court and having your “credit rating” lowered is about it.

Let’s talk about court first. My understanding is that the credit card companies can drag you into court and try to get a judge to order you to pay. I have no idea what happens if you are ordered to pay but simply do not have the money. I guess judges can be pretty creative if they so choose, so it probably all depends on the judge.

It’s also my understanding that they can’t come after your house, so that’s probably not a concern. Getting back to the court thing, unless you owe the credit card companies (big banks) a lot of money, I’m guessing they aren’t going to haul you into court due to the sheer volume of consumers in default and the years it would take to get all those cases through the court system. To say nothing of all those expensive lawyers the big banks would have to pay!

Think about it, how many people are defaulting on their credit card debt these days? Hundreds of thousands? Millions? My guess would be millions, but remember, I don’t trust the numbers from the media or any other “official” source. I suspect they would play the numbers down the “official” numbers for two reasons.

Firstly, to help prop up the Big Lie that the economy is rebounding. Secondly, because misery loves company and worse yet (for the big banks) big numbers mean big power. What do you think would happen to the big banks if everyone defaulted on their credit card debt. Yeah, bye-bye big banks.

If it was common knowledge that a huge, and I mean huge number of consumers were not paying their credit card bills, it might give folks a little comfort knowing that the big banks have to be getting pretty desperate to get consumers to pay up. The real power is in the hands of the consumers, but historically, humanity has lacked the intelligence or will to realize it.

What about another bail-out for the big banks? How would that sit with the public? Not too good, I suspect. I reckon there are already a lot of regular folks wondering when their bail-out is coming. Keeping the big bank execs in their mansions and yachts is probably something the folks down at the local diner are not losing much sleep over.

What about that second problem, you know, the whole “credit score” thing? That’s one of the first weapons the big banks will unleash on a consumer who is not making their payments. Nobody wants their coveted credit score lowered, right? Sounds like their wielding a mighty big stick there doesn’t it? Think of the vast armies of minions sequestered in their little monkey-cubicles at Experian, TransUnion and Equifax with their hairy little monkey fingers poised over the “naughty” button just ready to dispatch you to the credit no-man’s-land! The horror!

Let’s think outside the box a bit for a moment shall we? Picture the world a year or five down the road. Millions and millions of consumers have had their credit scores reduced to previously-unheard of levels. How will someone ever get a mortgage, buy a car or rent a place to live? They key lies in the “millions and millions” I just mentioned.

A huge number of consumers with lousy credit scores is also a huge number of consumers that the big banks cannot lend money to, right? That’s more-or-less the conventional wisdom. What if the numbers of consumers with lousy credit scores is so vast that the big banks find themselves short of people to loan money to? What do you suppose would happen then? You don’t have to be a Harvard economist to realize that without consumers to loan money to, the big banks go out of business. Oh the humanity!

You don’t suppose the big banks would set up some “special programs” for people with bad credit so those poor deadbeats could borrow money again do you? By now I think you get the point.

It is my opinion that the big “We’ll report you to the credit bureaus” threat that the big banks love to throw around is a paper tiger. Face it folks. This country is in tough shape. The powers-that-be have allowed our manufacturing base to be exported overseas and unbridled greed and corruption is doing serious damage to the housing industry.

Feel free to think I’m full of crap. Hell, maybe I am full of crap! However, if just a few of you come away from this feeling just a little better, I will feel it was worth the 30 or so minutes of my time I used to slap this together.

It’s just common sense. The banks need us. Without customers there would be no banks.

Sure a lot of us are going through a lot stress these days due to mounting bills that cannot be paid due to job loses and other economic circumstances, but personally I’m not going to spend much time fretting over my “credit score.” I think the sheer number of people with lousy credit is going to make it a non-issue in the future.

Like I said, I hope this makes at least a few people a little less stressed out. You may be facing some tough times, but know this without a shadow of a doubt: You have a lot of company.

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