Today we are on the ground in the United States. The topic on deck: Is the US a nation of borrowers?

Consumer confidence is at an all time low in the U.S.
More than 2,000 people are declaring bankruptcy daily
Thousands upon thousands of jobs have been lost in recent months due to the sub-prime crises…

I am starting to wonder, what were the behaviors that got us into such a mess?

I think we can beak it down into a few root causes:
First, Greed and a “buy now as opposed to save and buy later” mentality
Second, Poor financial education and a lack of financial sophistication
And finally, consumer traps and the wide availability of credit with “sub-prime” terms

We want it all, we want it now. We want it bigger, better, flashier… and chances are, we are going to charge it. The consumer mentality in the United States has been shifting in the past few centuries.

From movies, to music, magazines, and books, popular culture is increasingly more focused on the pursuit of not life, liberty, and happiness, but diamonds, designer clothes, and the newest BMW.

They are pumping out the message that we deserve everything and anything, and the worst part is we are buying it, literally.

This point was truly driven home while I was working part-time at a US retail company, Victoria’s Secret. Like many clothing stores today, Victoria’s Secret offers store credit cards. The card comes with a hefty 24% interest rate, only disclosed in the fine print of a brochure handed out after the customer signs up.

One day a woman came in to sign up for the VS card (all it takes is a driver’s license and a debit or credit card). She had just obtained her first credit card from a questionable company. She was approved for the card (it is almost impossible to get denied) and was awarded a $500 limit. She proceeded to spend the limit almost to the dollar and then walked out. She took the bus home.

Regardless of financial stability it is incredibly easy to obtain credit in the United States. In fact, we are practically drowning in credit card offers the minute we turn 18 and it doesn’t ever seem to stop. And while many people seem to fall into the “credit trap” those who are perhaps the most vulnerable are the nation’s working poor.

According to a BusinessWeek article “Wages for the working poor have been stagnant for three decades. Meanwhile, their spending has consistently and significantly exceeded their income since the mid-1980s. They are making up the difference by borrowing more. From 1989 through 2004, the total amount owed by households earning $30,000 or less a year has grown 247%, to $691 billion, according to the most recent Federal Reserve data available.”

This has all been made possible through wide spread high interest, high fee financing, or subprime lending in other words.

Driving down the block in my hometown of Cleveland, Ohio (which has consistently been ranked as one of the poorest big cities in the US throughout the past decade) the messages along the road seem to repeat themselves.

“No Credit, No Problem”
“Financing for All”
“Rent to Own”
“Quick Cash”

Pay Day loan services, check cashing companies, rental services, used car dealerships all encourage low-income consumers to live beyond their means as they reap the benefits. In addition, the people they are targeting are frequently un-educated and easily susceptible to scams…. Something they are all too willing to take advantage of.

You might be wondering “Why on earth would these companies be targeting people low-income, low-revenue individuals who might never be able to repay?”

The truth is that it is a major, fast expanding business. In fact, these “alternative financial services” businesses generate more than US$250 billion a year.

Major US financial companies have caught wind and joined in. HSBC Finance, Sallie Mae, Wells Fargo, US Bancorp, Bank of America, and Merrill Lynch & Co all have either their own version of “alternative financing” services or are funding companies that do.

So, with all the constant “buy, buy, buy” messages, the wide availability of credit and credit with “subprime” rates, it is no surprise that the US is in the situation it is.

Only time will tell if behaviors and regulations will adapt to rid the county of this “affluenza” and spending craze.