Saturday, September 15, 2007

British bank run update

The Guardian Unlimited reports ("Fears grow for British economy as panic over Northern Rock spreads") in tomorrow's edition that:

"US Treasury Secretary Hank Paulson flies in to London tomorrow to discuss the worsening global credit crisis with Chancellor Alistair Darling, as fears intensify that the lending squeeze could be the last straw for Britain's buy-now-pay-later economy."

What is Mr. Paulson going to advise? He represents the world's leading buy-now-pay-later economy. Our economic growth has been predicated on debt for years. It's how we sustain the illusion of middle-class expectations and upward mobility. You get to pretend you own stuff and that you have earned stuff, in exchange for accepting all sorts of systemic injustices and thwarted opportunities. It's our national devil's bargain.

What can the British possibly learn from us? Perhaps Mr. Paulson will advise how to calm the sensibly alarmed Brits with some rhetorical strategies tying economic stability to consumer spending and attitude.

Even now, credit card companies are ramping up sales pitches to subprime borrowers, while cutting back on offers to good credit risks.(source) They can make so much more on people who carry a balance and accumulate late payment fees. In this financially twisted environment, it's good business to lend to people who have little to no hope of paying back their debts. It's 21st-century servitude to a monstrous and invisible master.

Welcome aboard good people of Britain. Teach us that panic may be a reasonable response to fiscal irresponsibility.