[owenmarshall]

>I'm one of those people that, whenever they hear about economic problems, always thinks individuals are responsible. I want to know, am I wrong?

Yes. And no. Economic problems arise because of a complex interactions between individuals and institutions. Both share responsibility -- while individuals should never go into a debt that they will likely struggle to repay, institutions shouldn't make it possible, or even easy.

>Nowhere does it say you need a house with a spare bedroom and a bathroom for each person. You aren't entitled to a car, let alone two. It isn't some birthright that you go on vacation or buy a flat screen through credit.

No, it doesn't.

But consider: many people are financially illiterate -- they don't understand just how long it'll take to pay off revolving debt when they are paying interest + 1%, they don't know how to save money, and so on.

And when the credit card company says "don't worry 'bout it, we will give you a year same as cash", they're not going to read the fine print that says if the payment is late even one day the APR resets to 30%.

And when the mortgage company tells them that "housing prices always go up, so you just get the ARM now and refinance later!" they aren't going to think what happens when the bubble bursts.

Now, those people must share some of the blame, not only for what happens to them but what they do to everyone else. But at the same time, we need to ask two important questions:

1. How do we get people to stop living paycheck to paycheck and on easy credit, and start learning to save money, read the fine print, and understand finances?

2. How do we get institutions to provide a more critical evaluation of a persons finances before they offer them a huge loan, both in bad times and in good?

[nobodyspecial]

#1 education. It's your duty as a parent (if you are) to teach your kids to live below their means, AND demonstrate by your own actions that it's the right thing to do. This would cause a lot of problems as our society recalibrates their thinking, but it's the only long-term solution that is reasonable (imho). #2 quit pushing liar-loans, limit the amount of interest that can be charged on credit-cards to 8-10%. Sure, that would limit the available credit, but so what - it would help insure we, as a people, stay solvent.

Another thing to remember - all of this credit just inflates the dollar cost of all goods and services - credit card companies get their cut, and the credit is created out of thin air (oversimplification, but it's based on a bank's reserves).