probably heard about paying it forward and of course,
we all know about paying it back. But what about paying it down?
Debt, I mean.
Sit in traffic
and look around. Probably no more than 20 or 30 percent of the cars
around you are paid-for. People routinely buy more car than they
can really afford via the seductive mechanism of debt-financing.
It is the keystone of our economic life which is arguably
why our economic health is pretty poor.
artificially rapid progress sort of like shooting some nitrous
oxide into a cars engine. It will go much faster than it otherwise
would, but the catch is not for long. It is not sustainable.
When the nitrous (or the creative financing) runs out, there is
a severe and sudden slowdown kind of like what weve
been experiencing these past few years.
people can afford a car with six air bags, more computing
power than the Apollo 11 rocket, with 17 inch wheels and 300 hp,
swathed in leather and fitted with the finest 12 speaker stereo.
Well, they can drive it around for awhile so long as they
can keep up with the payments.
to an economic sword of Damocles hanging over the head of the debtor
who probably also has mortgage debt and credit card debt
and some other debts on top of that. Multiple that by 300 million
and you have a picture of the American economic system as it currently
bad but worse is the way debt-financing hides the cost of
government from the average person. Consider vehicles. It is no
coincidence that the pile-on of government mandates that started
small in the late 1960s with seat belt requirements and a few basic
emissions controls that rapidly upticked to increasingly global
requirements that began to necessitate the wholesale redesign of
entire systems, then entire cars, during the 70s and 80s
and right through to now tracks exactly with the rise in debt-financed
vehicle purchases and also the ever-increasing length
of the payment plan.
has become five years even six years.
And as every
sharpie salesman knows, extending the loan decreases the monthly
payment creating the illusion of affordability. Innumerate
people think if theyre paying only $250 a month
for six years they are doing so much better than their neighbor
who pays $340 a month for three years.
the rest of the article
[send him mail] is an automotive
columnist and author of Automotive
Atrocities and Road Hogs (2011). Visit his
© 2012 Eric Peters
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