Dear Ralitsa,

I, just like you, grew up in Bulgaria. Seven years ago I decided to try my luck out of our country of no opportunities. So I packed my suitcase and left for Germany. There I met my husband who was in the Air Force at the time and two years later I was headed to the USA. Before we came here though, we decided to buy a car since the $500 '83 BMW we drove in Germany wasn't fit to drive here. I, of course, was determined to pay cash for the car we were going to drive. I did not know what a loan or a credit card was at the time. I was broguht up to buy for what I can pay. But my husband, being an American, talked me into buying a brand new vehicle which came a long with a monthly payment. Now, I live the American way. I sometimes use a credit card (for emergencies which I have had plenty of the past copule of years), I have a car loan and a mortgage. I am a little bit ashamed that I owe all this money. It is always in the back of my mind and it bothers me greatly that my money is spent before my paycheck hits the bank. Yet, I enjoy the benefits of living this life. I grew up having just enough and I never thought I lacked anything. My parents tought me to work for what I want. Unfortunately, where we live it is impossible to function without a car. In Bulgaria I could rely on the cramped city transportation. I also enjoyed walking places so much and I miss it tremendously.
It is weird to me that my husband is alright living on credit because, I guess, this is what he is used to. But not me! It drives me crazy! So now, I am determined to get out of this vicious cycle and pay it all off. Slowly but surely we are working towards owing our things and enjoying our money that will be ours today and tomorrow. I will not miss those payments, I promise.

Dear eden;

Some of the worst problems in this entire society actually occur because there are those individuals....like you....who believe that only a few people with similar thought patterns can do what is best for everyone else, which usually turns out what is best for themselves and in the meanwhile not only oppressing others but maintaining a legacy of self entitled luxury to themselves and their generations that follow.

Do everyone a favor around you and PICK UP A BOOK!

Dear Ralitsa,
some additional thoughts from my side about the questions you have asked yourself.
If I do remember well then the States had a similar problem a bit more then 20 years ago. The solution at that time was similar to today if I do remember well. In the past it could work because the pay level was upon the same level as the prices. Today the U.S. economy has for a period of 10 years and more a lot of well paid jobs replaced by low paid jobs and this is one thing that they do not take into account.

You are right that easy getting to credits are the root cause for the problem but that is not the only problem. Independent from easy or hard getting a credit the credit has to be paid back. The replacement of the well paid jobs by low paid jobs is another problem that has led to this situation because it creates a gap between pay and price.
These gap led the people to spent more money for their daily needs and to a reduction of saving money for invests or pay backs.
I do see not that they try to solve this problem and that could avoid the whole plan from working.

To prevent the economy from being freezed the economy has to sell products either on cash base or on credit base. The cash based growing is a very long, very hard extremly slow growing process and requires the people as well as the investors to accept this. What normally is not given. The credit based growing goes much quicker because the people are able to spent money for more than only one thing.
Independent from the process both can only work if the level of the pays is the same as the level of the prices.

This leads to some interesting thoughts about the bailout plan.
They do say that the gov. is willing to buy bad mortgage but what does that mean in real? Does the mortgage taker has to pay back to the gov. or is the mortgage taker be cleaned after that? If the mortgage taker is clean after that could that lead to getting a house for free or means bad mortgage that the mortgage object has been destroyed maybe by a tornado or hurrican? What does that mean for the mortgage taker who do pay back their mortgage regular, do they pay twice for their own mortgage and as tax payer for the others? If the mortgage taker was not able to pay back his mortgage how will he pay back a possible new credit?

Finally all that what they want to do can only work if the people that do get the credits are able to pay them back. If the people are not able to pay back their credits the U.S. will get into the same situation again and that very quick.

A large group of slum children munity and street children are asked to bring sand from a beach to fill a sandpit for children living in a posh development.
Why?
Because the children in the posh development have mucked up their sand pit and it needs to be emptied out and refilled.
So, what do the slum children get?
Nothing. They get to do the hard work and they to see that there's lots of sand but only some children get to play in the sandbox.
this is how i see the many millions of the world's population –we are all bailing out stock markets around th world.
i wonder if any government would ever–ever–willingly and readily provide 100 or 10 or 1 billion of their monetary unit to starving and ailing groups of people anywhere.

dear ralitsa–there was a carelss typo in the previous comment–please delete it. i shall send it afresh.
include the fresh one, if it makes sense.
thanks
k

A large group of slum children and street children are asked to bring sand from a beach to fill a sandpit for children living in a posh development.
Why?
Because the children in the posh development have mucked up their sand pit and it needs to be emptied out and refilled.
So, what do the slum children get?
Nothing. They get to do the hard work and they to see that there’s lots of sand but only some children get to play in the sandbox.
this is how i see the many millions of the world’s population –we are all bailing out stock markets around th world.
i wonder if any government would ever–ever–willingly and readily provide 100 or 10 or 1 billion of their monetary unit to starving and ailing groups of people anywhere.

Consider China is now positioned to pay back its dues to the US and international world for securing its oil for the past seven years since it joined the WTO.

Of course, western hard work led to the technology and consequent lives saved in securing that oil for the past 50 years.

China has had its share of sitting around and slurping its noodles from hammocks for hundreds if not thousands of years waiting for the west to catch up. We also in turn owe China thanks for funding what amounts to a glorified Habitat for Humanity/subprime building project. Next, the US should renovate its electricity infrastructure and help China and NE Asia do the same.

Discussing the real issues that Americans, in the age of information, are ready, willing and able to comprehend is the real issue and CNN is poised to make that happen

Best Regards,
Andrew
Seoul, Korea

The sucess of our economy is based on citizens making fiscally irresponsible decisions. Borrow instead of save. Newer is better. Buy on credit.

I don't believe that the bailout will provide any long-term benefits. I don't believe that bankers and investors have learned any lessons from this meltdown. I don't believe that consumers have really learned anything.

What is needed is a complete shift away from buying on credit.

Ralitsa,

This is a really fascinating perspective. I think living in America one forgets that the notion of credit and the ease of the credit system is not a universal norm. However, I also thought your post raised a strong point that we are also a replacement society. Whereas you saw a car by the side of the road and considered fixing it, I think the response of many would be “Look at that piece of junk.” It seems to me one of the more fascinating phenomena even in my own lifetime is seeing the idea of fixing things basically ending. Even when I was a kid if your TV, radio, bike broke you fixed it or took it to someone else to fix. Now we’re far more disposable, and its often cheaper to buy a new object than repair an older one. The question being if we are moving into a service economy why aren’t we servicing more? It seems to be a movement toward new and more which furthers the existing credit problem.

To Karen, the reason why we dont fix things is because of the cost. The cost of servicing a product with western labaor is far higher than the cost of production with Chinese labor ( plus transportation, distribution costs et al . ) Sorry to put it so brutally, but basically I think vast numbers of western labor force are grossly overpaid for the value they create in a globalised world. Thats why wages have not increased for the past 10 years for the average Joe and is unlikely to increase in near future. For the wage that is required to sustain a n elaborate lifestyle, the average Joe needs to be far more skilled than what he is today to justify the wage.

Dear Ms Vassileva,

You are one of my favourite anchors, on CNN-I! :-D

My mother is 84. She was born in New Delhi, India. She has never had a credit card. She owned a business, but has never borrowed against anything except Accounts Receivable - to make payroll.

Unless it is cash or a cheque, as far as my mother is concerned, it is not money.

My father was born in 1911, in Alexandria, Egypt. He had a Diner's Club Card. It, like American Express, is not a 'credit card'. You
use it, and you pay them at the end of the month. It is a convenience, not 'credit'.
They do not carry balances.

I am (unfortunately) not from their generation.

You said:
But what about the debt attached? What happens if I lose my job, how would I pay the loan back if I can’t sell the car? It took me a while to become comfortable even saying, I “own” a car? Do I really?

I treat my discomfort by trying to pay off my credit cards at the end of the month. I still
wish I wasn’t in debt, but I so like my opportunity to live well today with the money I make tomorrow.

22 years ago, I was a flat-broke graduate-student, with a spotless credit-record, so American Express sent me a gold-card (no application or anything). I decided what was missing in my life was a car. I had negative income: paying to go to graduate school, on a part-time job that
just barely paid for my shabby little flat.

The dealership ran my credit, and POOF I had a car.

I still had some discipline, and did my best to pay all my bills, every month, working extra hours as necessary.

This was in the 1980s. Then, I defaulted on $700USD (1986) on the AmEx card. They are the
only company who have ever blacklisted me. I couldn't get a card from them, now, if
Ted Turner legally adopted me!

In the early '90s, I was very, very broke. I had a bad accident in work, and destroyed one ankle. I was on Worker's Compensation, which barely kept me in my flat. I required four operations.

I had to pay part-cost for all those hospital stays, which was an enormous amount of money (I thought - It was actually less than $10,000USD -1990) I ended up using credit to pay most of that.

I also used credit for food, clothes, and the occasional trip to the doctor. They say nobody should ever pay with credit, at the supermarket. Well... I couldn't get around. I was on crutches, and strong drugs, and I couldn't work. My ankle was surgically rebuilt, over four operations.

Ultimately, I couldn't make my car payments - I loved that car, and was devastated when I had to sell it. I couldn't pay the credit card companies. I went into debt-consolidation, which takes 'an easy 60 months' (Five years, to you and me).

As soon as I was out of debt-consolidation, I started receiving a barrage of offers for bigger, better credit-cards, with higher limits, and lower interest! I threw them away. At the time, I was living with someone who was not making much money, and neither was I, and I didn't want to press my luck. I got one card, for emergencies.

That worked, for half of the '90s. Then, I went through a bad break-up, and found myself living alone, in a flat I couldn't afford, unable to afford to move house. That was an 'emergency'. I didn't throw the offers away, any more. Pretty soon, I had a full deck of cards!

It took time... during which I accumulated a lot of consumer-debt. I finally found
myself with a partner who made good money! The 'American Dream' beckoned - possibly because I was in my thirties, and had been living hand-to-mouth since I left for uni, at nineteen.

My partner had just had to declare bankruptcy, because of hospital bills. But, on my parnter's salary, with no expenses besides food and rent, it was possible to live very nicely. We agreed that my partner would make the payments, and pay off my cards, but we could use them, for household expenses, car maintenance, and the occasional fun night out.

By then, I was legally disabled. I filled out applications online, and declared my income as less than $6000USD/yr! It didn't matter, because the 'household income' was above $75,000. My partner never signed anything - clever - and never had any debt attached. It was all mine, and, over the years, there was a lot. We built it together.

When the relationship started to show signs of being abusive, I quietly contacted a debt-consolidation service, and started paying my entire monthly Disabilty cheque to them.

This time, I didn't have 60 easy months. Though I begged for two more years together, because I was so ashamed to default on my debt, a second time... the relationship became so dangerous, that my best friend, here in England, said 'just default on the debts, and come back to live in England'. I really had no choice.

I could have paid everything off, if I had two more years. As it was, I'd have been permanently insane, in two more years.

My ex paid for the flight, and paid to send me my books and things. I asked if my ex
would finish paying off the debt, and got a 'don't be stupid' for my pains.

What makes me angriest, is that I was forced to default on my credit (and lost my car) the
first time, because of medical expenses. My ex, who made a good salary, was bankrupted by hospital expenses.

The health-care system in the USA is more than broken. It's immoral!

I should have been more alert, that I was being stuck with all the debt, by my ex. That was my own fault, for being in love, and not thinking about 'exit strategies'. Of course, since this was the USA, our partnership was not legally acknowledged. I had no recourse except to leave the country, and hope that those major, international banks, wouldn't care enough about one default, to come after me.

Now, those banks have more things to worry about, than the remaining third of my consumer-debt. But, it still bothers me, that I could not leave the States with my debts cleared. I had clawed my way back into the middle-class, by not spending on myself, by using public transport (impractical, if not impossible, in the Denver sububurbs), and by taking a good job, (badly underpaid, but worthwhile) which ultimately caused me to become disabled.

In the USA, disabled people, with no other income, are 'uncollectable'. Their creditors are out of luck.

In the UK, there is no such thing as 'uncollectable'. Inflation and the cost of living are AMAZINGLY high here, for someone who was used to the USA. If I get into debt, despite the fact that I am legally disabled, here, too, I can be arrested. There are fines, or there is jail.

(I've never understood fining debtors... If I could pay the fine, would I not have paid the bills??)

Now, I live by my mother's philosophy. Unless I know the money is in the bank, I can't spend it. Nobody accepts cheques any more. Debit-cards are good! They make writing bad cheques impossible.

Thank you for your story. You are a wonderful news anchor, and also an interesting person. It is nice to hear your personal voice, on a subject which is very 'American'.

To change the subject, somewhat, I appreciate the fact that in your news presentations, you make an effort to pronounce place-names correctly, and the names of non-American politicians and dignitaries correctly. I have noticed that the non-native English/American speakers make more effort to say these names correctly, than the native English/American speakers.

As someone whose 'foreign' name was the object of fun in school in New York, in the '60s, I am hypersensitive on this point. I commend you on doing a better job than the people who grew up speaking this crazy language, which you have taken the time and trouble to learn so well!

I am the child of two people who did not speak English as a first language. I do not make grammatical, or spelling mistakes, because they had to be conscious of their English, and it made me aware of mine!

So is the meeting of cultures beneficial to all...

:-)

Sala'am. Shalom. Shanti. Peace.

Uma

I believe in Obama so much though as the reports of his eloquence does not obviously bring better performance.So let us wait and see

@eden
@threemeals

You two are proof that the anonymity of the Internet is a double-edged sword.

Where do all these nutters come from? Conspiracy theorists who write about their favourite obsession on the slightest pretext, completely ignoring the article they are supposed to be responding to. Weird stuff.

Dear Ralitsa,

I come from Brazil, and there we do have credit, although it could be better described as legalized extortion.

For a long time there, we were the world leaders of hyper-inflation, a calamity that caused millions of people to be forced down below the poverty line – and banks to profit from abusive interest rates.

Today Brazil's economy is stable and growing, but the rates are still among the highest in the planet, so the average Brazilian is very credit-averse. I came to the UK and found easy credit really did exist and got myself in the rat-race.

Now we are in this mess. The problem with us was that we were not educated to use credit wisely. We use it to finance luxuries and consumer goods, instead of taking advantage of it to buy money-making ASSETS, like Real Estate for rental purposes!

If anything, another financial crisis should teach us some lessons...

Daniel Zucchi
London, United Kingdom

Dear, Ralitsa!

Let me start by telling you, that you have been a real inspiration to me, ever since I learned that you’ve moved from the Bulgarian National Television to CNN. Ever since that time, when I see you on TV, I feel proud that I am Bulgarian! Thank you, for being such a wonderful, open, and honest person!
In the beginning of 2000s, I moved from Bulgaria to Sweden, to find my new life and carrier. I experienced very similar situation and thoughts, to what you describe in your posting. In Sweden, people are comfortable living with debt. Debt for their luxurious new apartments and houses, yachts and boats, new Volvos or summer houses on the Baltic Sea shores, on some of the thousands islands that make Sweden so beautiful. For years I lived within my means, firmly believing that debt is dangerous. It took me really long time before I could accept the thought of owning a credit card (I have just one now). Interestingly enough, I also try to repay my debt at the end of each month! That line in your posting really made me smile!
Once again, thank you for being such an inspiration to me, and for making me proud of being Bulgarian! You are an awesome role model! I wish you all the best, to you and your family!

Best regards,
Boris K.

Stockholm, Sweden

Dear Ralitsa
As viewers, we tend to forget that anchors have the same kind of down-to-earth worries as any other person!
I'm from Switzerland and your face is very familiar to me because I really enjoy watching CNN. Until today I didn't know that you were from Bulgaria and I was quite moved to learn that you spent your early years in Eastern Europe.
Switzerland is a free-market economy but we don't get credit cards as easily as in the US. Here, banks are allowed to give you a credit card only if you have a well-paid and secure job . Two years after I started working as an acountant I was allowed to get one. After a few months I became tired of paying off every month and now I only use debit cards and I never spend more than I have.

Dear ralitsa,

I have read youre blog. I think there are some ways to get out of debt. At first there is maybe a possibility to negotiate with the bank to take a new contract for your debts with a lower interest. Other possibility's are: save money by economising with the daily foods, things who are not really necsesary, like chips, bear, candy etc.

To save some money on the daily petrol kosts, it's maybe an idea to buy a scooter. In holland, (were I live) a lot of people go to work by scooter. There are scooter models who use only one gallon by 150 miles. Here's the link of suchs a model scooter: http://en.wikipedia.org/wiki/Honda_Zoomer

I was also in the situation with debts, but I changes my daily spendigns, and with some time I fixed my debts. Now I save some money every month. Two months ago my fridge broke, and because I saved some money every month, I could buy a new fridge for myself.

I hope that my ideas are a possible way out of debt.

With kindly regards from Holland (the Netherlands, Western-Europe)
Rene

I think the fundamental issue is whether it was '...easy credit which got us into this fix" or not. In reality, financial wizardry, lax oversight and what can only be described as fraudulent ratings from the debt agencies acted in combination with the easy credit to create massive instrument risk and unparalled systemic risk.

Maybe yes, a whole pile of people got loans under the Greenspan -inspired easy credit regime who should not have, but if that were the end of it, you'd have some number of failed US financial institutions, generally in a handful of states with bad real estate markets. But, these loans, which were pretty obviously risky if left alone, got packaged and stripped and buffed and polished and sold on to people who were told that what they were buying was safe.

And it's not just a few- it's trillions of dollars- an unimaginably large sum and its gotten onto the books of every financial institution and is not just being carried as mortgage debt. It's been repackaged into a myriad of sophisticated products, is being carried at values far in excess of its true value and it has removed the absolutely essential element from the world financial system- trust. If you don't know what you own or what the guy trying to borrow from you owns, you don't know that you'll get paid back and you stop lending. That happened. The system has collapsed- it's not in danger of collapsing. It has frozen.

The problem now is that nobody has trust that they'll get repaid, so nobody gets credit and credit is the essential grease of the economic wheel worldwide. At the personal level Ralitsa, maybe you and I can tighten our belts and not buy a car until we have cash. It calls for some sacrifice, sure. It actually calls for true 'economics'- the allocation of our scarce personal resources amongst various competing uses. The issue though, is that corporate credit- the ability of companies worldwide, from mom and pop shops to mobile phone companies to car manufacturers- has frozen as well. When you can't trust that you'll get repaid, because the finacial architects have proven to be liars and frauds, you don't lend, and these companies can't borrow.

Don't lend to me and I can't buy a car. Don't lend to Ford or Eurocell or an airline, and they can't meet their payroll or refinace existing debt as it comes due. Thousands of people get tossed out of work, none of whom can get credit, few of whom have a 6 month cash cushion and who will all stop spending, crushing the cash flow of everything from their local grocery stores to washing machine manufacturers and car dealers and so on, and the entire economic food chain collapses.

It's not easy credit which is now the issue- it's credit period. It isn't there for most people and most companies. And until it is again, we have huge problems.

It seems in the United States it is more than common to take loans on everything. The sophisticated financial system allows this "freedom".

When my parents came from China to Germany, many years ago, with about 1000 Deutsche Mark in their pockets to make a life of it, they were forced to get a loan. It just wasn't possible to create a stable perspective for the family otherwise. But there was not a single doubt that, when they started their business, the very first and most important goal was to pay off that debt and only then to start earn our own money.

For me, it is a great thing that i'm able to borrow money without much trouble if I needed to. But it also goes without saying that I want to bear this liability for a short a time as possible, that is get rid of it asap. I don't think it's a good thing when people get used to debt and live with it almost unawares, and that they don't even feel the burden anymore (unless there is a financial crisis...), because it became rather unnaturally woven in the daily routine.

This 'freedom' of obtaining loans has been exploited. Now people are not borrowing for a living anymore, they are only waiting for an opportunity to buy something new, because it is so dang easy to get these loans........

Hello Ralitsa,

I was very interested in the presentation of your blog on CNN, very enlightening thank you for that insight and sharing a bit of your personal life and interests. I must say that I always enjoy your presentation of the news and enquiring but charming manner when interviewing people.

Like you, I also come from a world of 'first save the money – before buying the goods'. I feel that it isn't a bad characteristic! But I also have a credit card which I use for payments over the Internet and suchlike. But feel I still have to clear it, i.e. pay back the credit in the same month so that I can remain 'in the black'.

Of course I do believe that we cannot these days unfortunately live without credit, I also have a personal loan (credit) for my house, but feel that I need to pay this back before accepting any other financial 'support'.

Do please carry on with the blog and also news events as you do presenting them with such charm. Once again thank you.

Art€

Just out of curiosity, how is the international credit crisis effecting Bulgaria and ordinary Bulgarians?

Even before I turned 18 I had a credit card itch. I thought it was free money, readily availabe by those famous low interest offers to college students to use on whatever they want. That was then.
5 years later, I find myself in debt with student loans but credit card free. Thanks to my job in South Korea I was able to pay off thousands in credit cards and hopefully student loans in the future.
The current financial crisis is a bruden on me in a way that the foreign exchange rate has plummeted here in North East Asia. I do remain slightly optomistic about the outcome in the future!

Wow! How would we in kenya love to be a credit economy! Our people are not big on paying debt. Amex would go bankrupt

Dear Ralitsa, kind of hard to read al the weird stuff / essay-long mails, but here I am: as short as I can.
I was introduced to creditcards in the US while attending University and find them fine as long as I use them like real money. When I dont have some, I don´t spend any..
Still: I do not understand, why states like germany and france have to do rescue plans with almost the same amount of money as the US, while being so small in size that they would fit into Texas........Will the US -god forbid- have to enlarge the 700bn? Maybe one of your experts knows an answer to that.

The credit crunch is just another clever way for the upper .01% of the richest people to compress yet further the amount of wealth in the world. They planned it. This is not an accident. Bush is a stooge for the rich powers.

As far as living on credit-most people do it. There is not much choice unless you live like a monk like I have or make a very good living which most don’t. I have lived debt free for seven years. It is excellent. Then I got married to a woman in Hong Kong who proceeded to dismantle that and then had a son which put me in with the rest of humanity.

The owners of us have clever people now that adjust prices up and down based on who is buying what. They use those computers and programs Bill Gates helped them develop. The consumers blindly buy more crap they are told they need to be comfortable. This happens until we run a card up then get another card.

The way out of this is a worldwide awakening by people that Gucci, Prada, BMW etc. are things we don’t need anymore. Also the owners are about to choke the golden goose. Enjoy the show. Eventually a few years from now the owners will have to calm down and stop bleeding everyone because there will be no one left to bleed. When that stops maybe a paradigm will occur. Hopefully. People might start to realize they don’t need all the crap they have. Don’t need that “best” school for their little one. Don’t need 3 trips a year to a second home that wastes energy. Don’t need a horse for their little girl Trisha. Don’t need endless, mindless products made by people who don’t give a damn about them. Maybe? Or maybe not.

This is not unique to America. Asia has copied your worst values now so they shop even better than you do.

As much as i support the conveniency that comes with flexible payments of credit and credit cards but i still believe the best way out of insurmountable financial burden is buying things which you REALLY need and buying them when you have the means to.

There are certain conveniences which the only means of possessing them is almost only through credit(Mortgage).BUt a very careful and well-planned saving policy/culture before buying any mortgage will help in reducing the duration of the payment and emotional stress that comes with it.

Personally,I dont buy anything on credit and my credit card(which is sent from my bank free of charge)is well kept in my wardrobe..

The very system that has catapulted the economies of developed countries is the same system that is threatening to crash it, In my country Nigeria, the mortgage system is still in its infancy and we have no cause to worry about the mortgage busts.

This phenomenon is a challenge to the world top economists to come up with appropriate theories and model to fix it and prevent a recurrence in the future.

The next nobel prize might just go to the economist that can come up with something ingenus.

Ms Vassileva
credit makes it easy to spend beyond your means.

This goes out to Bob who commented on Obama. You know what? I happen to believe in the ministry of william branham. What i find disturbing is how we humans come up with our own interpratations of things. Did william branham ever mention Obama by name? Then why would you be the one to interprate his words? Anyway i dont think this blog was on obama. Clearly bob you are in the wrong place.

Everyone forgot the golden rule: what goes up, evenutally comes down. Recessions are natural events, just like occasional hurricanes and we were long overdue for a big one and boy is it coming due. No doubt, it'll be tough but we will weather it as every generation before this one has. There is no surprise here and the upside is that it will teach a lesson about living within our means. I'm disappointed that both Presidential campaign say nothing about living responsibly, as if there are no lessons to learn here and no one is really at fault when there are lot of culprits, borrowers and lenders alike. I'm glad this happened within my lifetime. Kids (this include those under 40) must be taught that there is no "reset" button in life. You need to play the game out and survive for the better. You can't start over as if nothing happened but you can rebuild.

Perhaps this financial crisis can finally teach Americans the kind of values you learned back in Bulgaria. One should not live beyond one's means, or if so, in a very responsible way. The level of self-indulgence and loss of self discipline in the way many Americans buy and live their lives is doomed to result eventually in corrections, like the one we are seeing now. Only why should those of us who do live responsibly (and understand that borrowing heavily from the future is too risky for one's family) have to pay for the re-setting of the playing field for those who acted irresponsibly? The bailouts and rescues and what will be trillions of dollars of diverted (or newly printed) funds to correct a bloated system that was essentially a hugely unbalanced check book, are a penalty to those who understand the limits of credit in one's own life. While aggressive lending practices pushed by political will are of course partly to blame, those individuals who over-levered themselves are in the first place responsible for alot of today's mess. It someone offered you free food, as much as you can eat, would you eat yourself to death? Of course not, your body would know when to stop. Unfortunately, in the case of many Americans, their common sense did not tell them to stop borrowing. Its time to restore some basic self-disciplines and create a new base for really strong fundamental economic development. Now is a chance America, please take it.

Hi Ralitsa

I live in Denmark, scandinavia and I am intrigued by the way you describe how you felt when you came to America.

Here in Denmark we have a social system that protects people who are unable to work, have an injury or are ill. We are what John McCain with a demonic face calls socialists.

We like much of europe see distributing the wealth uhhh as a moral must .....

Ralitsa can you tell me why your new country (America)goes against all the principles of fx the bible.

I understand your feeling that it is great to live a good secure life now by loaning. I too do the same.

But Ralitsa can you explain to me why americans do not understand the difference between socialism and communism.

Do not get me wrong ....America as a dream have some great lessons especially when it comes to new ideas ....elitism (in america it is strangely wrong to be clever like Obama hmmm)

Thanks for your great reports Ralitsa I like your style ...I do not like my credit card loans:)

With kind regards
Kim
Denmark

I tell my children very simply that credit is for emergencies, for major assets with long term value, and for those things you want right.

Using credit for emergencies is reasonable, but it is NOT an emergency when you get a flat and need new tires. Those are routine expenses. An emergency occurs when a completely unanticipated event occurs.

Using credit for acquisition of long lived assets also makes sense. I tell my children to remember that furnature, appliances, houses, and so forth have life spans on the order of 10years or so. Buy what you like and can afford, and don't be afraid of usinf credit to buy things that will be used for 10years or more.

Clearly, using credit to buy things that you simply want right away but cannot afford is foolish. I tell my kids that using credit means you'll be "saving" after the fact while using cash means you'll be saving before the fact. Saving after the fact costs 30% more and is silly.

Credit plays a similar role in business. Many businesses now borrow near term operating cash, and that seems silly. Using credit to acquire long term assets such as buildings, inventions, and so forth makes perfect sense.

Having a country trained top use credit, does however, have one interesting effect in economic management; it gives the Feds a direct handle on consumption. Combining control of consumption through Fed rates with control of investment through the tax code provides complete control. Perhaps this is why the credit based economy has been promoted?

Dear Ralitsa,

like you I prefer real money over credit cards ... but after I found out that by not using a credit card most people [in the USA] think that you have no credit at all I changed that habit ;-) ... Now I carry all cards of the major companies (Diners, AmexCo, Visa etc.) and I love to embarass vendors by questioning them, "do you accept cash?"

On second thought "money": it's nothing but printed paper and its worth is based on belief :-)
C.

The only thing that will deliver or help the US and to a large extent the world is for the people living in America to be pratical in their spending. Buy only what you need and can afford. If they continue to live the same way they have been living, no rescue plan or bail out plan will save the world ecomony.

Dear Ralitsa,

Having read your Blog on the freezing economy of the moment and
" IOU to the bank " Creditcards I certainly agree. I work in my own time all day, writing books e.g. so why do I still live in debt? Spending money can be done locally as in Bulgary ofcourse, so why should we visit supermarkets and spend $ 90 or more at once?
When I stand in line among housewifes and neighbours they all share at least one thing, I notice: and this is A HAPPY FEELING.
Quality Products, Client Service, Choice and Price make this AH supermarket to one o my favorites and that's what all clients in this local store have in common.
Life would be so easy to me if I just had to eat, drink enjoy and wash.

WM Young – Netherlands

Dear Realista.
Now I understand why you look so nice and compassinate. You are from Bulgaria, great history made by greater people even if they could not win what was rightfully theirs. You know weapons...
As for your credit dilemma, please try not to get trapped into that. I mean a car for going to work is OK, but all the un-necessary things that people buy with the money they don`t have. The idea never appealed to me when I was living in the States (in the 80`s!). At that time France, Spain , Italy.... the continental Europe did not use credit cards either. Life was what one could afford and people OWNED what they had.
I think that old way was and still is a lot more pleasant.
And probably will not end into the kind of crisis that the morld faces now.

I wonder where they got the Money from to support the poor system.

You steal the future of your children's and you waste it
so we do it too who cares?

It looks like the Revelations in the bible

babylon is falling.....?

"have fun stay clean"

Hi Ralitsa,

I guess the amerian citizens need to do a little bit introspection and work consciuosly towards saving a part of their income. Most of the Americans I believe live on debt and they spend beyond their known source of income. Savings is a prudent way of securing ones financial future.

With Regards
Showkat Hussain
Bangalore India

Ralitsa,
I sure wish I was still paying for everything with cash! Life was a lot less stressful back then. Sometimes I look around at all my "stuff" and think "why did I buy all this?" But when I think about putting my credit cards in the shredder, somehow I'm unable to make myself do it.
Kim

Dear Raalitsa, Truth is bitter for many to swallow but the reality is that Fiat money backed by nothing tangible in itself is fraud on the people. For us to come to a true understanding i urge all to undestand money, banking,their evolutions. It really is repulsive to the mind when one comes to understand our fiat money system. What is false must eventually kill itself.

Sir Josiah Stamp, former President, Bank of England "Bankers own the earth," he said. "Take it away from them, but leave them the power to create money and control credit, and with a flick of a pen they will create enough to buy it back."

I can relate to your experince in Bulgaria; believe it or not I am living in Bulgaria.
Friends from Metro New York where I am officially a US resident know that I have been a road warrior for many years and can understand why I came over.
I am a business consultant tapped by a private arm of US AID to work with a local firm to assist them grow the business faster and be competitive against global and/or regional companies.
So, yes, I brought with me Western thinking to share with Bulgarians especially borrowing money to invest and further grow the business.
But the premise is the firm must first be profitable to be able to afford borrowing for expansion and growth. So I have show them Western ways of how to make continued profitable growth a reality,

Dear Ralitsa,

"Living well with the money I make tomorrow" is what Governments do borrowing money. Could this deficit be resolved by just printing more money? Governments can do it, but with bad consequences, at least when done alone by a single country. But if all the main countries will issue the equivalent amount of money at the same time to recover their economies they could be avoiding most of the bad consequences. Could this be a solution?

This bail out money instead of giving it to the Banks to avoid them collapsing because the people do not pay their loans, the Government should give it to the people so they can pay the banks, avoid them collapsing and keep the money flowing. This is a healthier way of helping the system because it helps everyone in the system and will make people trust and support the Government.

Your views on debt seem to rhyme with mine and the society I come from in Uganda. Debt is used today but is still seen as an anormally in my society and ratios of credit to bank deposits attest to this. In the more rural communities, the neighbour with debts is not to be trusted. He/she is presumed to be a cheat and the local reference is the same as thief. In a group of colleagues and friends, esteem is not built by declaring how much debt you have, or in your speak how many credit cards you have, but instead honour comes to those who are known to have no debt. As for me, I understand the benefits of debt in business but like you I find it difficult to say I own something paid for by borrowed money or debt.

I have been brought up to buy only if we can pay for it. However the younger generations here in Asia seem to buy everything on credit. I believe that things have changed because now a days both parents here in Asia work and have no time for their kids, thus the guilt feeling and to compensate for it they give their kids a credit card.
Sad to say the outcome of all this is the making of a future generation of material seeking society, who lacks the responsibility and ability of managing their finances properly.

The fact that one is able to get lots of things done, with easy credit is actually what makes western life better than,that of the developing world.Non availability of credit in the western world means hundreds of years back in history of the earth.

@ Inka / Germany

I am not an expert but I do know that you can not compare the german banking system as well as the work of the german gov. with the american in that easy way.

In Germany you have a rescue package only. In the States you have a rescue package and the gov. is willing to buy stocks of the banking companies. If you add both then it looks a bit different.

But nevertheless here are some facts to the german banking system. Maybe it helps you understanding.

The german banking system is splitt into 3 parts(3-pillar-model) which are striktly separated. You have private banks, public banks and cooperative banks. All together we have more than 2000 credit institutes. Maybe the colleagues of Ralitsa can give you the corresponding american number.

About more than 1300 are cooperative banks owned and controlled by the members who have founded or later on joined the cooperative. The main goal of the cooperative banks is to work for the members of the cooperative and therefore the surplus goes directly to the members of the cooperative.

About more than 500 are public banks owned and controlled by the communities(cities or counties) or states(in case of LBBW, BayernLB and so on) where they are placed in. The main goal of public banks is to work for the communities or states where they are place in and not to optimize profit.

The rest are private banks owned and controlled by investors. The main goal of them is to optimize profit.

The banking system is barely consolidated and this gives the private banks a very small base to realise profits and puts a lot of pressure upon them. The more profit is requested the more risky must be the way. But you can't see something about that because the german law allows them to hide it.

There are some exceptions within the pillars that do also work upon an international base. The state banks(LBBW, BayernLB and so on) do work upon an international base although they are public banks and they have been hit hard by the mortgage crisis.
Meanwhile the SachsenLB has been overtaken by the LBBW and the BayernLB must wrote down more than 2bn Euro.

Therefore it was not suprising that the BayernLB was the first german bank to take money from the gov. based upon the rescue package.

The german situation is characterised by a very low consolidation of the banking system and a very high number of small credit institutes that do not work to optimize profit and a law that allowes companies to hide profits as well as losses but also the will to realise as much profit as possible.

Hopefully it was not to much text to explain the german situation.

But independent from the countries, independent from the banking system within the countries and independent from the law where all is based upon you can be sure about one thing...
none of the affected institutes will tell you the truth about their situation until they are forced to do or they can not hide it further on.

Hi Ralista

So nice to see this blog from you. I was watching you on World News in the weekend and had to go and have a read. Great you have commented on the current credit crisis/crunch. The one thing I like about CNN INTERNATIONAL is involving it's presenters in this sort of forum. You are so right regarding your comments paying for items with cash and not using credit. I was bought up the same way to pay my way and not use credit as such, even though I do own and use a creditcard.I do pay it off every 2 weeks on payday and am always watchful of my limits. I watch this latest world event with much interest and am somewhat relieved I only have a morgage to worry about unlike the many people who have much and many money worries at this present time. I do look forward to CNN INTL in particular following this as well as the upcoming U.S election and see what the near future offers us all. From the wee island nation of New Zealand who 3 days after America Votes will too go to the Polls too,I sign off. Regards Grant from Kiwiland Downunder.

greetings from germany

First i am sorry that my english is so bad i hope i can explain my point so that everyone understands that.

The reason why your money system crashed is because your to greedy.

You have to seee your market like a field of appel trees(exampel)
If you cut all trees because you want a lot of money by getting appels and wood.
you get it but then nothing is left = crash

the trees are the people of the US
you have to make sure that they can spend money (appels)

same with your export.

if you take a look at the economic it looks like a pyramid
at the top are the richest at the bottom the worker
ask your self can the top stand without the bottom ?

think about it

Harald

"have fun stay clean"

add

Credits are not the right tool to help your customers because its like a snare arround their neck.
Its destroying a lot of families/people
when they are poor the crime rate is going up too.

Workplaces are the best solution to support them
Its not that important that you`ll get the most profit from the product
more important is that a lot of people can live from it (spend money)

"have fun stay clean"

i have bad thougths about how some people think thats not human like.

A big problem is also the birth rate on earth too many people i guess
so we (Humans) have to educate people so that they think before they get a baby.

Earth has limited resources thats a fact

I fore myself have no children no women no sex
because i am poor and i can't feed them.
think thats a good solution for your future.

annother point people without any qualifikations can be intelligent too so don`t dump them all give them a chance be a christian

think about it

"have fun stay clean"

Hi Ralitsa

Your blog really make some good points about how many of us live a life on credit so to speak.
Unfortunatly, today most people in developed countries are used to this lifestyle of living on money they havent yet earned.
I am from Norway myself, and just like many others, i live an life with an fat wallet, well fat with creditcards that is.
Its kinda sad when you think about it, but that is how the economics around the world has turned out.
Seems to me that the days when you actually had to think about what you have the money to buy is gone.
Now, its all about grabbing that creditcard, zipping it trough the machine in the shops, and hope you have the money at the end of the month to pay your creditcard bills.

Greetings .. i live in the Netherlands Antilles i wanted to point out i know this has not s much to do with your first blog but i think Obama is the right choice becous : to be president one needs to have allot of stamina and must be able to handle many things at once, McCain is forgive me but he is aged and i do not doubt his record but him being with bush for so long is hard to ignore and i don't think he is capable to be president and concerning Palin... hmm.. no she is the least capable out of all of them and i know you agree with me . But what we need right now is change and Obama is the one to bring that change we don't want more of the same with little change of course the change Obama will bring will be hard to adapt to but it is the first step to coming out of this hole we all dug ourselves into every country and every singel person is watching this election this will be Intresting.

There's nothing wrong with credit since people know how to use it . What happened this time Ralitsa ,and it was long overdue, was that you folks there have mismanaged your judgement. Nobody forced you to buy, which is a good thing as far as macroeconomics goes, like crazy not taking care of the payig back time. One of the jobs of the banks is to lend money, and people who know better, and all of us are supposed to know, is to take them if we can. Something has to do with ourselves. Now is payback time, eventually it will end untill the next time. Greetings from Rio de janeiro, Fernando Ferreira

Dear Ralitsa,

Thanks for sharing a bit of your life, I am from South America and I feel the same as you at the end of the month when I think that I have to pay my loans. But also I realize that without them I will not be able to be and work in Europe. I asked for a loan as the only way to received a good higher education and develop my professional career. Sometimes is the only way to meet goals and offer a better life and opportunities.
Please keep with the posts and the good work!!
Send you regards from Brussels

If this is Ralitsa Vassileva, please e-mail me. I am in middle shcool and want to find out more about you. My dream is too be a news anchor for CNN NEWS just like you. I need to your help with some collge information. What courses did you need to take and what collge did you go to? Please e-mail me. I would really appreciate it.

Dear Ralitsa,

Your thoughts are quite revealing to most of us, non Americans or living outside America. You have given us ome insights into the current economic crunch sweeping accross the world. It is a fact that debt is a burden and any system that promotes makes it a way of life leaves in dilution. I am from a developing economy, and want my country to develop, but I abores credit based economy where people consume today what they expect tomorrow.

Dear Ralitsa!

I'm from Hungary and my english isn't the best at all.
I just wanted to tell You, You are my absolutely favourite anchor. And You're on CNN, which is really the best news channel. So, this is a marriage made in heaven. You shine CNN. Thank You so much for Your great work.
Best regards
Gábor

Nobody seems to mention the uniqueness of Barack Obama. He is a black man, educated, as he mentions himself, mostly by white people in a state, far away from the black ghettos of the continental US. He is a black man but he thinks and talks like a white man. He has charisma and a clear mind, is a tremendous orator and a surprisingly good writer. This rare combination in a black man explains his general appeal across the races.

On CNN, a great-looking woman charmingly revealed that she was entranced by the young and beautiful Lewis Hamilton. I found her blog and read the one about coming from Bulgaria and getting into debt.

Margaret MacMillan's Paris 1919 taught me a little bit about old Bulgaria's elegance and individuality. I'd like to read more about Ralitsa's early life in Europe.

Apparently, Ralitsa's blog draws thoughtful and intelligent readers. I love those comments!

there's a saying, "he who goes a-borrowing goes a-sorrowing"... is it still valid these days?

Greed is what its all about and great salesmen.The western world is obsessed with possessions.Look on the TV to places like India,DR Congo these people only possess what they can carry through no fault of their own.They work so people in the West can be rich,the West knows this thats why it lets them stay poor.Unilever is an example of a co.which profits from a poor country whilst the country stays poor.
The only reason people will vote for MacCain is because he is white.People will vote for Obama because they want to see change in America and for the world hopefully to become a better place for everyone.

My last response was that a bailout was to be given to the three big auto but then again poverty in the world has been on the rise.The more poorer people become,the less product they buy.The results in huge capital loss for manufacturers and provider of services as people can no longer afford such luxuries.The manufacturer cuts on staff,people lose jobs and there is more poverty.It is just a cycle.