Reading an economic report at Moody's Economy.com, I was struck by one sentence. It read something like: "If the U.S. falls into recession, it will be because the American family couldn't make good on its debts."
While that oversimplifies all the factors that went into the creating and popping of the housing bubble (including deceptive practices and fraud on the part of lenders and the "irrational exuberance" that accompanies any such asset price inflation), the basic cause of the country's economic problems is the fact that a huge number of borrowers couldn't pay their debts.
As we are seeing, fiscal irresponsibility can be devestating not just to those whose houses are foreclosed upon, but neighbors, lenders, other borrowers, the growing numbers of unemployed, and on and on as the effects ripple through the economy. So, it's about time that some thinkers have begun discussing debt not simply in economic terms, but moral ones.
In a terrific essay, Barbara Dafoe Whitehead, co-director of ...1