Spectator on the growing credit crisis

When I look back on the events that got me where I am today, two things stand out. When I entered the real world university, crummy jobs there was no such thing as an overdraft. If you wrote a cheque for $50, and there was $49 in your bank account, the bank bounced your cheque and charged you $10 for the privilege. Shame followed. There were no cash cards, no credit cards, no holes in the wall where you could get money day and night. This meant that you didn’t spend your last five bucks on a cappuccino (no Starbucks either), because it meant you would walk home.

My other hunk of gratitude is that I didn’t start drinking until I was in my twenties. Until then, I was an amateur drinker: whisky sours and eggnog on special occasions, wine at Christmas. As much as I’d like to give credit to Elizabeth Barrett Browning for Sonnets of the Portuguese or Julia Child for volumes 1 and 2 of Mastering The Art of French Cooking, both of which were influential in my life, I have to give credit where credit is due: good old debt-free sobriety.

‘Here comes Benjamin Franklin,’ says my son when I launch into my fireside chats on the virtues of sober thrift. I confess that I am a member of the ‘kiss and slap’ school of economics, refusing to sign on the dotted line so that he can have a credit card at the same time as putting hefty sums into his account that provides a cash card. He’s heard me quote the Debt Curse if you pay the minimum each month, it takes 18 years to pay off £1,000 on your Visa card so many times that he now sings it to the tune of Amazing Grace.

But debt is no joke. In the global scheme of things bird flu, global warming and obesity debt may seem benign, but it is as toxic as carbon monoxide. The farmer who has a farm overdraft is all right as long as nothing really bad happens, but within whistling distance, I know farmers who have sold off every cottage, every barn, then the fields, always whittling down the overdraft. Today’s university graduates worry more about their debts than they worry about terrorism, the war in Iraq and finding true love. This Government, presiding over the most indebted country in Europe, isn’t going to advise its citizens to cut back on spending, because that would be a recipe for total calamity, but the alternative spend as if your life depended on it is the road to ruin.

My friend Nicholas, a wise man who lives in Maine and spends a lot of his time think-ing about money, tells me that the problem is that the very rich now have too much of the world’s money. He cites Henry Ford’s genius in giving his workers an unasked for raise because ‘if they didn’t have money, they couldn’t buy Ford cars’. The problem now is that average folks don’t have enough money to buy the cars, and the 21st-century version of Henry Ford can only buy so many ocean liners and private jets.

But Nicholas’s real fear is that debt makes young people timid and obedient, makes people do what they are told. I remember my parents borrowing money from their parents to buy a bigger house. It was a bitter moment. They hated admitting that they still needed Ma and Pa’s money to survive. It also meant they had to obey the Old Rules as soon as they stepped in the door. We now take it for granted that we’ll have to help our children buy a property, but it won’t give them the freedom we imagine. It will lock them into debt for the rest of their lives, and Benjamin Franklin will ring in their ears.