Common human reaction or common sense?

My favourite online dictionary gives 9 meanings for the word 'crunch'.
Meaning 3: "to tighten or squeeze financially" and meaning 7: "a shortage or reduction of something needed or wanted" are very appropriate when you add another word in front of it: credit - which also turns it in the most popular expression of the last months: Credit Crunch.

My favourite business consultant Richard C tells it in a nutshell: "Lots of people (and not just those on low incomes) ran up lots of debts. Then the ‘credit crunch’ happened. Now some of those people can’t pay their debts."

What happened? A credit crunch? A shortage or reduction of credit needed or wanted.

I've always been told that there is no such thing as a free lunch - credit needs to be paid back. Even cheap credit as we apparently have been offered over the last two years. It has to be paid back. One day.

But cheap credit sounded like that free lunch: you want to buy a bigger house, we'll give you the money very cheaply so you can have what everybody else has now; you want to go on that expensive holiday, we'll give you the money very cheaply so you can have what everybody else has now. Credit, credit, credit on every corner. Just so you can keep up with the Jonesses - like everybody else does. Common Human Reaction.

Common sense should have told the debtors one day - soon - the balance would have to be settled (credit and debit go hand in hand). But common sense isn't that common anymore it seems. Free lunch is what everybody saw - and what everybody else had/did/could do.

Balancing day appears to be here now, but common human reaction prevails again: who's to blame? Not the debtors - they were offered a free lunch; not the lenders, they just provided what everybody asked for, a free lunch.

Aren't buzz-words handy? Credit crunch. No need to change anything, just the buzz-word next time round.

Comments

[Steve Roesler]

Karin,

I like this one a lot. You've captured the entire dynamic in a brief space.

When I think about this situation, I think about the part of human nature that believes "when things are good, they are only going to get better." So, when the money is flowing and the credit is available, human nature says, "I'll always be able to make my payments."

We often forget that there will, indeed, be a rainy day.

[Karin H.]

Hi Steve

Part of human nature indeed, or should I say the nature of part of the humans ;-)
Living together with someone who 9 times out of 10 sees a rainy day even when the sun is shining and the weather forecast is very, very bright, has taught me that ;-)

But most, as you say, see a - sometimes unrealistic - ongoing positive outlook on financial risk decisions.

Karin H.

[clarice]

Indeed, "common sense" are rare to us people - and i admit I'm one of those often times. But then again and again, people learned from "mistakes".

"Human nature" can still be modified.

I suppose it's just a matter of choice! :)

[Karin H.]

Hi Clarice, welcome

Accepting mistakes you make is a good start, modifying your next step might be a bit more difficult as human being I think. Common sense would tell you it's better to modify, but common behaviour might 'block' or hinder that step.
Choice or effort? I don't know.

Karin H