The essence of the rebalancing = at the level of individuals

FRONT PAGE: "The 'Democratization of Credit' Is Over--Now It's Payback Time," by S. Mitra Kalita, Wall Street Journal, 10-11 October 2009.

The democratization of credit was a good thing, as virtually all democratizations are. But the reason why there are basically no true democracies in the world (instead, they are republics or representational democracies--if the term cannot be abandoned) is that they're too unstable--too easily given to manias and abuse that sends them searching for salvaging dictators.

In other words, democracies are too hard to discipline. So no great surprise that, with the relatively recent democratization of credit, abuses ensued, especially among the young who, quite frankly, have only lived through good years (our last true recession being in the early 1980s!).

So the correction (or crunch) creates a formative impression on a generation, and this is good.

Comments

[Ellie]

Observing cable news outlets, where I suppose most folks get their news, makes me cringe at the thought of a true democracy. Reminds me of Ross Perot's electronic town hall plan.

[Petrer]

This reminds me of the "pro consumer" credit card bill that got passed a while ago. To people who don't fool themselves, the bill was really a "anti stupid and irresponsible consumer" credit card bill. Since issuers could entice borrowers of all credit ratings, people with good credit could rise on the backs of the others since the others could see their credit card rates jacked up (rightfully so, but I do know the issuers were taking advantage of the democratization). Now irresponsible consumers simply won't get the credit at jacked up rates, or any rates, anymore. Simply, responsible users will see their rates go up somewhat to compensate.

The Founding Fathers were brilliant, they understood the least worst system is a representative republic that separates powers vertically and horizontally. A "king" isn't bad if that person can be counter acted by a legislature! etc..

[William R. Cumming]

Probably the wrong paradigm for credit issues since while the undeserving are blamed it does appear that waste, fraud, and abuse had a bigger role as Corporated Socialism buries deeper into the genetic tissue of US as a democracy (republic)wherein those who can pay will and do under rulings of SCOTUS that corporations should have same civil liberties as individuals although the corporate form initially designed in coffee houses of 16th and 17th Century London and Amsterdam to deal with problem of ships sinking on the long voyages of that time. If our demise as a Republic occurs will have been greatly facilitated by SCOTUS.