What matters too is something more intangible - the feeling of liquidity. Freedom to spend and invest for consumers is part of that story. At this hour of economic fragility, the White House argues, animal spirits must be sustained. All the more peculiar to find the same administration pushing for tough new bankruptcy restrictions that would clamp down on both those frisky risk-taking souls and their pocketbooks. But the failure here is not primarily one of bad policy.
Financial responsibility is an important precondition for the healthy functioning of a free market.
The lesson is rather one of the perils of political scheduling. Then two things changed. In 1978, lawmakers revised the bankruptcy code, making it easy for citizens to walk away from credit card debt and other unsecured obligations. Citizens found they could write off onerous bills to Visa or MasterCard and start anew - usually without jeopardising their home ownership. Then came the credit card revolution.