Thursday, 16 October 2008

Did you or I cause the credit crunch?

To those of us who grew up in Thatcher's England, and went to college with Loans not Grants, and free overdrafts that could be increased on a whim, and student credit cards - was it our fault that the financial world has crashed down? Most of us protested about loans, had parents who did not want us to take them out, but who could not have afforded to keep us in the Manner in Which we Lived without them.

We took out loans, sometimes in addition to small grants, we had free overdrafts, which we increased to go away for the weekend, or shopping, or the pub. We had credit cards, which we only ever paid back tiny amounts on, and we maxed out more than one free overdraft before leaving Uni. No one I knew bothered to actually live on a budget, or well, not bothered, just didn't really get the point. If we needed more money, we knew which banks would help us increase our overdrafts, or we got part time jobs.

I worked all through Uni, first at the University Bookshop, at least two days a week, then later at the bookies. I worked through all the holidays, as a cook, or an admin temp, and I spent every penny I had, plus at least ten thousand pounds I did not have.

I had a fantastic time, used to go out all the time with all my friends, who did the same. I think it was just L and I who worked (and as we both said we were the most working class people so possibly had something to do with it). Either that, or just loved spending money the most.

I hardly bought anything, bar food, booze, the odd outfit, but did travel a fair bit up and down to London, and visiting people and eating out and so on. We never went to expensive restaurants, never had posh make up, or clothes and mostly made do with the belongings we had. I did buy a few books, usually unrelated to my course, but it was, and still is, my money weakness.

So what did we do with all our money? Really and truly, we went out too much, although only to cheap student places and not spending too much money, we bought train tickets, and well, just lived. Which we did in debt, and do now in debt. Being in debt from such an early age, 18 meant we were not scared of debt, of getting a new credit card, or racking up an overdraft long after we left Uni. We'd never lived off the money we had, because, well we never had any to live off.

And now, it's us, our generation who have partly caused this credit crunch. The UK's debt is triple that of its GNP. The party has ended. My internet bank no longer had a little overdraft page, saying, x amount of overdraft is reserved for you. You and I have to manage on what we have, actually have in cash, not have in space on overdrafts. And do you know what, its really liberating. Sometimes we can't do everything we want, had to refuse a wedding invitation for a weekend event Up North this summer because estimated cost would have been around the £500 mark for all of us to attend. And we did not want to just put it on a credit card, because you know what, we'll have to pay it back eventually, and we just can't afford to.

But, I really really don't mind. I like knowing exactly how much money we have, and where it is, and how much we need to get through the month. I'm not keen on not having a large buffer around, but until we build that up, I guess that is what credit cards are for. Emergencies, not fancying new clothes/books/holidays etc.

But is it all really our fault? Of course there is the sub-prime mortgage market issue, whereby all Americans, and many British people thought it their right to own a home, even if, maybe they could not afford it, or the one they wanted. But that is just part of the problem, and not the total issue, certainly not in the UK.

How did we get here though? Is it the fault of the banks? Or is it truly the neo-Liberal politics of the 1980's. Did the big political thinking, the vision if you like of late capitalism inevitably lead us here? And did we all follow along like sheep without really thinking through our participation in this World Order? Course we did, even, almost especially the intelligent people of our generation. We forgot all we learned growing up in hard times, we forgot budget, meal planning, making do, and the cardinal rule of never a borrower or a lender be.

God I feel stupid about it, and even stupider that its taken me until yesterday at approximately five pm, so begin to piece it all together.


Anonymous said...

Is it our fault? yes. Is it the banks, yes.

I spent so much money in 6 years on cards and loans that I could not repay it and went bankrupt. The insovency agency wanted a list of all my assests so they could seize them only to find that I had managed to spend £60k on nothing (well holidays, food and booze!)

Now in my 30's I know the price of everything, how much to the penny I have to my name (not hard that as generally it's under £10!) and most of the time I am fairly happy. My mother tuts and shakes her head pointing out that something which has taken me over a decade to realise was something she used to do everyday of her life.

time to wake up and smell the roses? well yes, if i could afford them....

tattyhousehastings said...

We'll just have to grow our own roses, and admit our mothers were right all along.
Thanks for you honesty too. Hard admitting we've crunched ourselves isn't it?

Richard de pesando MA(RCA) said...

it's a funny thing. but I could never stand roses, nice flowers, but with a big, ugly shrub, covered in thorns attached to it.

If I was a better writer, I'd turn that into a metephor for my finances.