Impetus for our Economic Woes – “Free Money”
About 10 months ago, I wrote a post about people who were “lucky” enough to receive lines of credit by accident at K-Mart. While everyone is pinning the credit problems the country is facing on Wall Street greed, I think the blame needs to be shared. I believe this is a good illustration about how Main Street needs to share the blame with Wall Street.
“‘Free Money!!!’ was what some Wauwatosa, Wisconsin residents were yelling as a Kmart computer glitch caused all credit applicants to be approved for lines of credit between $850-$4,000 this past weekend.
So many people got excited about the available credit that the store ran out of applications, and someone was selling applications from another Kmart for $20 in the parking lot. From an outsider’s perspective this is both sad and foolish. The sad part is that people were crazily exclaiming “free money” simply because their credit applications were approved. The foolish part is that these people somehow believe credit is “free money.”
As we have been learning, the United States economy is facing some difficult times due to an abundance of companies giving mortgages, loans, and other forms of credit to undeserving citizens. Sure, the reward is much greater for these higher interest borrowers, but the risk was too great. It’s clear that Americans view credit as something other than what it is.
Marketers jam our mailboxes with credit applications. Telemarketers call us and offer us lines of credit over the phone. Department stores practically beg us to apply for a card to save 10% on all purchases we make that day. It’s about time we become responsible for the credit problem and not continue to enflame the situation.
As corporate citizens, we need to think beyond the next quarter or fiscal year. We need to realize the impact of our decisions and how they will impact us down the road. Maybe denying high credit risk borrowers is a bad business decision today, but doesn’t it make sense?”
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