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USA: A Debtor in Denial

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Sen. Chuck Schumer (D-N.Y.) warned Republicans on Sunday that they are “playing with fire” by threatening to shut down government over their opposition to raising the debt ceiling and passing a budget in March.

As CEO of Wallace & deMayo, P.C., my law firm handled hundreds of millions of dollars in delinquent debts for over twenty years. Our job was to collect from debtors who failed or refused to pay their honest obligations.

Collecting past due debts is not a pleasant job. It involves negotiating with the debtor, trying to negotiate a settlement in which the parties reach a meeting of the minds to amicably resolve a contract debt. If an amicable arrangement is not possible, the filing of legal action to enforce payment is the only remaining option for the creditor. 

During my twenty plus years in the industry I became familiar with a pattern of behavior about delinquent debtors in general. They almost always go through a period of time when the burdensome stress of debt is simply too much to bear. So, they are in denial that they are broke.

During this period of denial, there is a tendency to postpone the inevitable—the day when the consumer has to admit they are bankrupt. It’s painful to watch because the pattern is almost always the same. The consumer opens new credit card accounts, in order to obtain a cash advance to make a payment on the past due debt of another credit card. Another tactic is to transfer the past due debt of one credit card to a new credit card account created by the debtor.

As their debt problem worsens, the debtor will often resort to obtaining loans from family and friends. In other words, the tendency is to exhaust all remedies before admitting they are broke.

Listening to Senator Schumer’s comments reminded me of all those years in which I had to deal with debtors who were in denial about their bad debts. It’s sad to watch our national leaders overtly in denial about our nation’s honest obligations. It’s pathetic to watch them try to convince the American public that somehow we can borrow or spend our way out of the unsustainable debt burden. They are behaving exactly like a typical debtor. 

There will be a day of reckoning — a day when the USA has to admit it cannot pay its debts. Every American family understands the need to balance the checking account, and it’s so unfortunately sad that our own government is unable to face up to the reality that we are a nation in denial. Our nation is still borrowing from Peter to pay Paul, except in this case Peter is not a relative, but rather China.

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About DouglasWWallace

  • Boeke

    At last! Republicans are waking up to their traditional role as fiscal conservatives!

    This, after they were totally asleep during the Bush years when they (unnecessarily) threw hundreds of billions of expensive tax gifts at the richest Americans, started expensive unending wars with TWO foreign countries thousands of miles from the USA and began a massive borrowing program with the Chinese. Oh yeah, and increased federal government size and spending by 30%. Oh yeah, and sent $6trillion of additional debt right to the bottom line.

    I guess you could say “better late than never”, but some might ask “why would we EVER trust these bozos again?”

  • http://ruvysroost.blogspot.com Ruvy

    Excellent article! Because I know what it feels like to have crushing debt on my neck and to be on the knife all the time because of it, I understand very well that no country can afford to accrue debt.

    And Americans have gone on a spending spree for decades – and their government right along with them. The only way Americans will force their “leaders” to act responsibly with their money is to force them to – and it may well take a revolution and riots for this to happen.

    Eventually, the debtors move in to collect what is theirs – or you nuke the bastards (like the Chinese) and tell everyone else they can get nuked if they don’t forgive your debts…

    No matter what you do, you bring the roof down on your heads.

  • http://ruvysroost.blogspot.com Ruvy

    Reality eventually closes in on you. And rising prices is one of the prices of high debt.

  • Arch Conservative

    Excellent article? Is it excellent because the average American has become that dumb as to not realize the simple, easily comprehended truth that Douglas has stated in his article?

    Say what you want about the gang in DC but one thing that the average politician is not is stupid. Rather it seems they must be aware of the reality but have wagered that they can go on living the good life and will probably shuffle off this mortal coil before the shit really hits the fan..either that or they’ve wagered they have it so good now that they won’t get any on them. In any event it’s callousness. They just don’t care as long as they get theirs’ yetthey have it within themselves to sanctimoniously lecture the rest of us.

    Both parties have been engaged in a contest to see who can flush this nation straight down the crapper the quickest for some time now.

    We just had the whole Gabby Giffords thing and were forced to hear about what a great gal she was. The calls for “civility” were really just a way for the politicians to feel sorry for themselves. The fact that one crazed gunman turned his weapon on a politician does not excuse the rest of them for their egregious behavior and the damage they’ve done to this nation.

    I like many in this nation am very angry. I don’t want to be. I don’t enjoy being angry. I imagine that most don’t. But we are nonetheless. The anger is justified. Hopefully this collective anger can ultimately channeled into something positive and beneficial for this nation. If not it’s going to be something very ugly.

  • http://ruvysroost.blogspot.com Ruvy

    Both parties have been engaged in a contest to see who can flush this nation straight down the crapper the quickest for some time now.

    We just had the whole Gabby Giffords thing and were forced to hear about what a great gal she was. The calls for “civility” were really just a way for the politicians to feel sorry for themselves. The fact that one crazed gunman turned his weapon on a politician does not excuse the rest of them for their egregious behavior and the damage they’ve done to this nation.

    I like many in this nation am very angry. I don’t want to be. I don’t enjoy being angry. I imagine that most don’t. But we are nonetheless. The anger is justified. Hopefully this collective anger can ultimately channeled into something positive and beneficial for this nation. If not it’s going to be something very ugly.

    Your words, Bing, prove the truth of mine. You’re angry – millions of you Americans are and have every right to be. I ran across this today on Facebook. This is the original article that comprises the “note” I read there.

    This article warns against using safe deposit boxes, claiming that Homeland Security has the right to break into any box and take what it wanted from it. But when you read it, you will notice it has no links. So, even though I no longer have a safety deposit box in the States, I did some digging. This article from Seeking Alpha warns about what not to put in a safe deposit box. It is easy to infer from the article that keeping gold bullion or coins in it is not wise. This article from 2006 from Bellaciao is very blunt. From the article:

    A family member from Irvine, CA (who’s a branch manager at Bank of America) told us two weeks ago that her bank held a “workshop” where the last two days were dedicated to discussing their bank’s new security measures. During these last two days, the workshop included members from the Homeland Security Office who instructed them on how to field calls from customers and what they are to tell them in the event of a national disaster. She said they were told how only agents from Homeland Security (during such an event) would be in charge of opening safe deposit boxes and determining what items would be given to bank customers.

    At this point they were told that no weapons, cash, gold, or silver will be allowed to leave the bank – only various paperwork will be given to its owners. After discussing the matter with them at length, she and the other employees were then told not to discuss the subject with anyone.

    This article has no links. But it says WHY. And it is the obvious grampa of the article I linked to originally.

    Some folks say Snopes debunks all of this, giving a link. When you consider who owns Snopes, you understand why I am leery of anyone who weasels out that Snopes debunks all of this.

    Thank G-d I’m poor. And thank G-d I don’t have any assets in America!

  • http://ruvysroost.blogspot.com Ruvy

    In the middle of December of 2010 a number of individuals got the same kind of message at the same time. The radio host of this program brought together these individuals. These are Christians, and they talk in Christian lingo – but wipe away the Christian lingo and stick with the message.

    They are saying that major changes will take place to introduce a new world currency. The dollar, if it survives, will be devalued in a major way, worth from half to 30% of what it is worth now. According to the sources, the euro will collapse first, with that collapse precipitating the collapse of the dollar. If the shekel here holds up, it will be equivalent to the dollar. If it doesn’t we can expect major inflation here.

    I’m seeing prices go up quickly here. The price of a loaf of bread has doubled from NIS 2.65 (when we got to Israel) to over 5 shekels; the price of gasoline is at over $8.00 a gallon; the price of natural gas is about to go up as 40% of the gas supply was cut off by an explosion in the Sinai.

    Fun stuff?

    Not really. the various sources all talk of a period of darkness occurring in the world in the near future. What this means, I dare not hazard to guess. Apparently, it means a lot of starvation for Americans. Apparently this will all take longer than an eyeblink. A meeting was to have taken place in August 2010; this broadcast was to say that the decision had been taken, and the decision was to ditch the dollar. The president of Sri Lanka warns of a global food shortage by April. Look at the world’s weather and how the world’s food supply will be affected. Riots took place in Algeria, Tunisia, Egypt and elsewhere, and not all of them have to do with “political reform”. There is no religion to starvation or death.

    I warned all of you that America provoked the Judgment of G-d. I gave you a symbol of blessing; I gave you a symbol of the withdrawal of that blessing. Now, finally, these Christians are waking up to the symbolism that they truly understand – the dollars in their pockets.

    This article, this excellent article, details the travails of the debtor and his psychological status of denial. You can ignore all this, and most of you will, but you do to your peril.

  • http://ruvysroost.blogspot.com Ruvy

    I don’t want you all to think that these problems are just for you in America to enjoy – the Manufacturers Association, Union of Local Authorities, and Israel Workers Union have all threatened a nationwide strike due to the rising cost of water, gas, bread and bus fare. Our economy in Israel is whole lot healthier than yours is in America.

    So, as I said, inflation is hitting here – and hurting. If it’s hurting us, it’s probably hurting you more.