Debt Man Walking !

Meri Jaan, so the US debt standoff has taken a seating and the fragile economy has been VIRTUALLY lifted. All Hail Obama!

Tou, While you enjoy this moment of upbeat market and start planning for a beach-trip to Ocean City, let me share a small story.

When I reached the Yankees shore in the late 90s, I would walk into the grocery stores, Sears, Walmart, JC Penny's and macys carrying cash bills of 100+ and 500+ USD Greens. One day, a friend who saw me use those greens said "dont walk around with so much cash - no one does." I asked - But how would I pay for purchases? Arre yaar - use Credit Card - US runs on plastic and the plastic card !

His mantra stayed with me, I took a note of his advice and started applying for as many credit cards that I could. Some rejected me, some dejected me, as I did not have enough credit history in the country.

Soon a very pretty sounding voice called me up to offer me a card. "We are offering you a PLATINUM VISA CARD with a limit of X amount. We are offering a promotional 18%APR and blah-blah". I was ELATED !!! Yeah - Now, I can live the plastic dream !!! I HAVE an Uncle $am issued CREDIT CARD.

Slowly and slowly I started using the card and kept paying off the amounts and it started building my credit. Initially I had a limit of X and that eventually became X multipled by 500 and manifolds.

Then one day, I realized, why pay off the complete balance? Why not pay only the minimum amount and keep rotating the cash in hand for other uses. So, I kept paying the minimum amounts, and kept moving my cash in hand for other purchase needs.

On the other hand, I also kept asking the credit companies to raise my debt ceiling, as I had already built a good credit.

We really dont need to go further into the story, as the larger idea is to point towards the FOREST, rather than being stuck in the trees and the shrubs!

Are you telling me that in the whole world, the economists are not forseeing the burden of the US debt-ing? Are we as lay folks missing something here?

Should we be rooting at this decision like a hollywood movie scene where the lead actor saves the world from a asteroid or a meteor strike and all the NASA folks start clappping and cheering?

Hey - the crisis has been averted - FOR TODAY!! But, there a need to seriously do some prob-ing? The larger picture is that US has about $10 to $20 trillion in debt and this does not account for the additional liabilities of about $60+ trillion, plus, not accounting the biggest fact that the entire country runs on - CREDIT CARDS!!!! This debt is going no where honey - un-hun !!

Meri Jaan, looking at my story, If the credit card companies raised my debt ceiling from 20K to 100K, it helped me purchase to the extent of 100K and that is fine if I could repay 100K. But hey - if I could not even repay 20K, how the hell am I going to repay trillion dollar debt??

See the forest? Dont you think it is still really a sad state 18months post the Lehmann debacle?

The point of the above bingings is not that US economy will not improve or should the govt have let the country go in another economic grave? Certainly not, these are just my ramblings because as tax payers, we should just have some awarenesss of the ground on which we stand.

I think the debt ceiling raise was the only option the house had to prevent the US economy to go in any more bad state. This decision has certainly bought some time till 2013.

Again that makes sense because the world ends in 2012 - right? So, while we all keep searching for the Economic SINGHAM post 2013, for now, from where I see - US is a debt man walking, tou bhaag DK Bose :)

Meri Jaan, till we meet next, stay focussed -plan for the labor day weekend, stay financially safe and stay in Loeve !!

- Pankaj