Just one year from a stock market crash and real estate burst that “we thought” forced us to re-learn the lesson our grandparents knew about leverage: Use it to buy assets, not liabilities. Don’t use it to buy merchandise that doesn’t make you money. I’ve closely followed Macy’s (M) for years, but I guess I missed the part about just how much of their quarterly sales are done with store credit cards! WSJ claims it’s over 50% last quarter (3Q 2009). I’d love to see a graph on this stat (% of sales on store credit) over the last 10 years. Do we really have a 6-month memory about how we spent ourselves into so much debt?
I could go on all night about how maybe we never learned the lesson; about how this could be caused by an over-reactive government that won’t let people and business fail en masse, in order to teach our society a lesson we need to re-learn,.. but I won’t for now.
It’s interesting that the article I read this in wasn’t really about the still shockingly high amount of Macy’s shoppers that are buying on store credit (all this during non-holiday months). As an American, I say YES to this federal proposal that you must prove you can pay before you borrow for clothing, furniture, and electronics.
And on that point, why can I get a retail store card without proof of income but there is no store credit at the grocery store?