The Debt Made Me Do It

[Guest guest]

The Debt Made Me Do It

 

The Daily Reckoning - Weekend Edition

February 11-12, 2006

Baltimore, Maryland

By Kate Incontrera

 

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MARKET REVIEW: THE DEBT MADE ME DO IT

 

Michigan, 2000: A man killed his pregnant wife, their three children,

and then himself after losing around $100,000 in Vegas.

 

Paris, France, 2002: A married couple poisoned their five children,

killing one, and then attempted to kill themselves. The family was

$360,000 in debt.

 

Massachusetts, 2006: Neil Entwistle, a British man in his late

twenties, has been charged with shooting and killing both his 27 year-

old wife and nine month-old daughter in their home outside of Boston.

According to news accounts, Entwistle had become " increasingly

desperate as business ventures failed and debt piled up. "

 

Apparently, Neil Entwistle had around $3,000 in credit card debt,

$25,000 or so in student loans, and was paying $2,400 in rent. He is

unemployed and allegedly in debt to some shady characters.

 

Does this sound stressful? Yes. Out of the ordinary? Not in this

country.

 

We hate to be the ones to break the news...but U.S. federal debt is at

$8.2 trillion - and growing every second. That leaves each and every

American's portion of the federal debt at over $27,000.

 

Add that to soaring consumer debt and a negative savings rate and it

just equals disaster for our economy. Does that mean that we're

putting ourselves in danger every time we go to the mall...all those

people with loaded credit cards...who's to say a crazed shopper

racked with guilt over spending $350 on a Coach bag isn't going to

lose it? While that's a highly unlikely scenario, we do hope that

people will start facing up to the reality that a negative savings

rate means that we are spending more than we're earning - and then

some.

 

Another way to think about our debt-driven economy is to think about

it in terms of the trade deficit. The trade deficit figures for 2005

were released yesterday, showing a record high for the United States -

$725.8 billion. The " pathological consumption " that is driving our

economy is an individual version of a trade deficit, explains Addison.

 

If you were to quit your job and live off your home equity, you may

stay home all day, buying things online, ordering take-out -

consuming instead of producing. " But remember, you didn't win the

lottery; " warns Addison, " you are financing this 'new plan' with

borrowed money.

 

" The lender will want that repaid. "

 

Something that hit a little too close to home for Neil Entwistle. And

if he pleads insanity, the defense intends to use the " debt drove him

crazy " angle.

 

" If Entwistle were found not guilty by reason of insanity, " says a

Boston Globe article, " a hearing would be held to determine whether

he should be sent to Bridgewater State Hospital until his mental

status improved.

 

" The lawyers also said that an insanity defense must have prior

evidence of mental health issues to be persuasive. Entwistle,

according to prosecutors, was not getting mental health treatment,

but was facing 'tens of thousands of dollars' of debt. "

 

In response to this, Harvey A. Silverglate, a Cambridge defense

lawyer and civil libertarian said: ''I don't think it passes the

laugh test to have an insanity defense because you are in debt. "

 

Kate Incontrera

The Daily Reckoning

 

P.S. More from Addison on pathological consumption below - and look

formore from him on how debt affects our country in the next few

weeks. A Boston reporter has asked him for his insights in regard to

the Entwistle defense of insanity by debt. We'll keep you posted...

 

In the meantime, you might want to take a look at our country's

balance sheet...we're certainly doing our best to rack up as much

debt as possible, all the while spending above and beyond our means.

Just take a look at the recently released 2007 budget:

 

It Weighs 11 Pounds and Has 2,400 Pages

http://dailyreckoning.com/EmpireDebt.html

 

===

 

What is left for Republicans to brag about? Once they did brag

about being fiscal conservatives. That kind of boasting had much

appeal. It sucked me in. I was a Democrat but I was willing to

help Republicans when they claimed they working on fiscally

conservative things....

 

But now it is plain that there is nothing at all fiscally

conservative about these so-called fiscal conservatives.

 

Those bad old Dems did some deficit spending. A little bit.

And they felt guilty every time. And Regan and Bush and other

Republicans blasted them for every cent of red ink.

 

Now the Republicans have taken deficit spending and jacked it up on

steroids. No Dem ever dreamed it might be possible ever ever for

anyone to do deficit spending like what we are doing right now.

 

Each minute our dollar is worth a little less than the minute before.

 

This is a crisis. No kidding.

 

Addison Wiggins is a pro-business pro-business capitalist capitalist

and yet he is totally disgusted with the Republicans.

 

Addison has been a guest at times on my radio show. I recommend him

as a guest and for his books and for his newsletter.

 

Sincerely,

Andy Johnson

===

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