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<h1><span style="font-size:12px;">Ya, Right! </span></h1>
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<h1>Opinion: The siren song of easy credit drowns out debt warnings</h1>
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<div class="byline"><span class="name">By Craig McInnes, Vancouver Sun</span> <span class="timestamp">December 15, 2010</span> <span class="comments" id="user_lblComment"><a>Comments (3)</a></span></div>
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<ul class="tab"><li class="story_tab"><a><span>Story</span></a></li>
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<div class="storyimage"><a><img alt="Most consumers are more attuned to the promise of the credit card, the promise that you don't have to wait until you've earned your dreams, you don't have to save first, you can have it now and keep the good stuff coming with payments that are always easy." class="thumbnail" id="user_storyphoto" src="http://www.vancouversun.com/business/3890205.bin" style="border:0px solid;" title="Most consumers are more attuned to the promise of the credit card, the promise that you don't have to wait until you've earned your dreams, you don't have to save first, you can have it now and keep the good stuff coming with payments that are always easy."></a></div>
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<h1 id="user_photocaption">Most consumers are more attuned to the promise of the credit card, the promise that you don't have to wait until you've earned your dreams, you don't have to save first, you can have it now and keep the good stuff coming with payments that are always easy.</h1>
<h2 id="user_photocredit"><b>Photograph by:</b> Tom Pennington, Getty Images</h2>
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<p>I found myself shouting at the television as I watched the news Monday night.</p>
<p>It's a bad sign, I know, but I was provoked. CBC was interviewing shoppers about their debt problems; a woman struggling to climb out from unmanageable payments after she used her credit card to pay for three vacations last year; another lining up for the latest electronics while worrying that if she or her spouse lost their jobs they would go under.</p>
<p>"It's easy," I yelled. "Stop buying stuff."</p>
<p>Easy, except that it's not. When it comes to spending, I don't even take my own advice. So just because the governor of the Bank of Canada, Mark Carney, and Prime Minister Stephen Harper are solemnly warning that a day of reckoning will come if we don't holster our credit cards doesn't mean that the Christmas cash register bells are going to stop ringing any time soon.</p>
<p>Carney and Harper were reacting to news that Canadian families now owe more than Americans for the first time in a dozen years after a 6.7-per-cent increase in household debt over the past year.</p>
<p>The trouble with their advice is that it starts to ring hollow when I consider what the two of them have been up to for the past couple of years.</p>
<p>"Low interest rates today do not necessarily mean low interest rates tomorrow," Carney said at a news conference. " Cheap money is not long-term growth strategy,"</p>
<p>Really? Isn't this the same Carney who dropped interest rates to historic lows to keep us all spending when the bottom fell out of the global economy, the same Carney who is maintaining interest rates at a level that makes you feel like a fool for not going out and borrowing more now?</p>
<p>And then there's Harper: "This is a matter that is of concern to the government, we continue to warn Canadian households that interest rates are unlikely to go down."</p>
<p>That would be the same prime minister who launched a spending spree on a grand scale and plunged the country deeply into the red, the same prime minister who recently extended the deadline for spending stimulus dollars, in effect keeping the tap open even though the crisis has eased.</p>
<p>One of the ironies here is that if Canadians took their advice and stopped spending, the economy would slow down even more and Carney would be under increased pressure to drop interest rates to persuade us all to open our wallets and purses again.</p>
<p>That's unlikely, however. Influential though Carney may be among economists and bankers, his advice runs against the grain in our culture. Most consumers are more attuned to the promise of the credit card, the promise that you don't have to wait until you've earned your dreams, you don't have to save first, you can have it now and keep the good stuff coming with payments that are always easy. We are generations past the time when thrift was a virtue and saving a way of life, at least in the old sense of the word.</p>
<p>Now, saving money is usually associated with buying things.</p>
<p>With low interest rates and motivated merchants who are already offering Boxing Day bargains, there's never been a better time to save. Open your newspaper and the flyers pour out. Save, save, save. And the more you spend, the more you save. It's the Canadian way, circa 2010.</p>
<p>Yet despite Carney's gloomy warnings, our shopping habits seem to be working for us as a country. Statistics Canada reported Monday that even though our household debt is rising, so too is our net worth.</p>
<p>Still, Carney's right. Conventional wisdom is still that interest rates have to go up. So if you are close to your financial limit already, a bit of the old-fashioned kind of saving, the kind you do without spending, probably wouldn't go amiss.</p>
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Read more: <a href="http://www.vancouversun.com/business/Opinion+siren+song+easy+credit+drowns+debt+warnings/3979268/story.html#ixzz18EGAZnDk" style="color:#003399;" target="_blank">http://www.vancouversun.com/business/Opinion+siren+song+easy+credit+drowns+debt+warnings/3979268/story.html#ixzz18EGAZnDk</a></div>
