Stateside: The Town Bike, Part 2

I got a wee bit sidetracked when I was writing my earlier column and forgot to explain why someone with credit cards at their max is attractive to lenders. Two words: debt consolidation.

It's such a lovely sonorous phrase, and the way it's touted you would think debt consolidation was the financial equivalent of one of those fizzy tablets that promise to take away the thundering headache you woke up with after a night of too much drunken fun.

Let me assure you, it is not the magic fizzy tablet. Nor is it the hair of the dog that bit you--it is the dog itself and it is still biting you. Nonetheless, Big Credit will try to convince you it's a fluffy toy dog that's going to be oh so good to cuddle-wuddle while you sort out your foolishness.

"Pay off your debt once and for all!" they say in their direct mail, knowing that you're desperate and won't read the fine print and even if you did, you wouldn't understand it and don't have a clue how to figure out if it really is better to borrow $5,000 from them at (possibly) 6.9 percent and pay it off over 60 months or if it's better to simply continue paying off that $2,800 debt (with its 15.9 percent interest) as you are now, at twice the minimum payment. Having closed off the credit card, of course.

Aah! Well, there you go. That's why they've sent you the offer. It's the very same company whose credit cards you closed and are paying off who now want you to turn the debt over to them in the form of a loan for even more money than you currently owe, where they can milk it some more.

But don't take my word for how the credit card industry in the US works, check out this website about the Frontline television programme, made last year in association with the New York Times: The Secret History of the Credit Card. It's at http://www.pbs.org/wgbh/pages/frontline/shows/credit/

The only thing of any value--ie, that is fought over--that people in the US actually own is their debt. And since that isn't actually theirs, they've been reduced to the equivalent of sharecroppers on a money farm. And when their ability to provide a return to Big Credit is exhausted, the newly signed bankruptcy law is brought in to whip the last bit of blood from their hide before throwing them off the financial landscape altogether.

Whatever happened to that Amendment from way back that outlawed involuntary servitude?

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