On consumer credit and debt load...

Apart from McDonald's, Starbucks, and Hollywood movies, one of the "great" US exports has been the culture of debts to the developing world.

In the late 1980s when I left Hong Kong, it's an almost avant garde idea to hold credit cards. American Express was only starting to distribute application forms to college students to apply for pre-approved cards, with not too takers. So, it was a rather abrupt about-face, when I went back for a visit in late 1990s, with only a decade later, that I saw TV commercials of debt consolidators to offer their service for people looking to alleviate their debt burden.

The same is happening in India now, with the younger generations jumping onto the bandwagon of easy money, seemingly "free" from credit cards. Naturally, most of them might not have bothered checking the fine-prints of their credit cards, how much interests they could be charged, should they carry balance, and the like. Some cardholders use more than 75% of their salary in paying card balance.

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The issue hits closer to home when, a few years back, I realized that my elder sister (approaching middle age) in Hong Kong has had some 10 credit cards, covering balances of one card with another. I would never have thought she, of all people, would cross the threshold to become a credit card junkie. Last month, I found out from my younger sister that our big sis is using some 99% of her salary for all debt loads, leaving only a few hundred dollars for monthly expenses. We were flabbergasted.

I'm not sure how we could help her. I know for a fact that if we, the family, help her pay off all the debts, it will only encourage more future misdeeds, much like the moral hazards that Greenspan committed, in keeping interest rate artificially low in early 2000s, effectively throwing easy money to feed the greed of Wall Street, and contributing to the current subprime and credit crisis globally now.

And we also know, for a fact that, with the way big sis is going, she would never be able to pay off the debts in her lifetime. She has maybe 10 to 20 years (max) of working life left in her, given the Hong Kong labor market that always favors the young who are cheaper. I'm not sure how she could manage herself in her retirement, since she would have nothing left but a good-for-nothing boyfriend (if he's still around) who will continue to suck her dry. And if we help her pay off the debt, it'll only feed off this guy who will find other imaginative ways to lurk her back into the debt game.

Man, every time my thinking gets to this point, it makes my stomach every sick...