When the market is on the death bed, Greenspan supplied the easy credit narcotic. The narcotics spilled in to the real economy. Enticed by the low "introductory" interest rates offered by greedy credit card issuers, Johnny-don't-know-jack-sh*t type of consumers went on a borrowing binge. Yes, nobody told them to borrow beyond their means. Yes, they ought to know better. Still, I think that one of the primary responsibilities of the Feds is to ensure a "sustainable" economic expansion, not an economy supported by borrowed money with pipe-dreams of paper wealth. I have seen families among my kith and kin reduce to the level of utter poverty due to irresponsible borrowing.
As far as the Fed responsibility is concerned, it is one thing to say "don't take that road, it is dangerous!" And quite another to guard the road with checks and balances.
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Wednesday June 9 12:21 AM ET
Students Plagued By Credit Card Debt - Study
By Andrew Clark
WASHINGTON (Reuters) - U.S. college students are increasingly burdened with credit card debt, according to a study released Tuesday, and the consequences can be serious -- ranging from higher drop-out rates, to future employment problems and even suicide.
The study, by Georgetown University sociologist Robert Manning, blamed credit card issuers for actively targeting students and colleges for allowing them to do so, sometimes in return for a cut of the profits.
''The unrestricted marketing of credit cards on college campuses is so aggressive that it now poses a greater threat than alcohol or sexually transmitted diseases,'' Manning told a news conference in Washington.
''If we do not swiftly address this pernicious problem, the costs will continue to escalate, with social consequences far more tragic than mere dollars and cents.''
Based on hundreds of face-to-face interviews and surveys with students, Manning concluded both the number with credit card debt and their indebtedness had been ''systematically underreported'' in previous studies -- which failed to reflect the ''survival strategies'' many used to cope with their debts.
These included the use of federal student loans to pay off credit cards, effectively shifting the debt, appeals to parents for loans, cutting back on course work to increase time at paid jobs, or even dropping out altogether to work full time.
''Official drop-out rates (attributed to low grades) include growing numbers of students who are unable to cope with the stress of their debts and/or part time jobs for servicing their credit cards,'' the study said.
Even then, debts can haunt students. ''Student credit card debts are increasingly scrutinized during the recruitment process and may be an important factor in evaluating prospective employees,'' it noted.
And the stress can also manifest in far more tragic ways. Janne O'Donnell's 22-year-old son, a junior at the University of Oklahoma, committed suicide in 1998 when he owed $10,000.
''I will never know the exact reason Sean killed himself -- he didn't leave a note -- but I have no doubt his credit card debt played a significant part in his decision,'' she said.
O'Donnell and Manning agreed students should bear some responsibility for reckless use of credit, but said credit card companies also had to be held accountable for making it so easy for them to get into debt way over their heads.
Visa, the world's largest credit card brand, said in response it felt ''a strong responsibility to educate college students about wisely managing their personal finances.''
''Although the vast majority of college students use their Visa cards responsibly ... continued financial education of young adults must be a priority,'' it said in a statement.
Manning said one of the most disturbing aspects of the student credit card issue was ''the seduction of college and university administrators by the credit card industry.''
Card issuers were sponsoring school programs, funding activities and even entering into business partnerships with schools involving college-branded ''affinity'' cards, he said.
''As a result, rather than protecting the economic and educational interests of their students, college administrators are playing an active and often disingenuous role in promoting ... the prominence of credit cards in collegiate life.''
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