The concepts, notions, and ideas represented in the story and book Maxed out as was written by James Scurlock represent the situation of the American people. It specifically highlights the predicament that the people of America undergo and suffer under heavy economic times and difficulties. The irreducible minimum and argument presented by the author asserts that the net effect of the borrowing processes would leave the Americans heavily burdened (Scurlock 6). In as much as the ordinary people may be enticed by the urge to spend on things and services beyond their means, their credit situation would be worse. The principle line of argument by the writer is that the customers would engage in heavy spending and borrowing by extension.
The price they would pay to offset the credit situation would be higher due to exorbitant interest rates. In retrospect, it means that the customer would be forced to pay even higher interest rates and instead enrich the credit and financial institutions. As a pointer, the author, James Scurlock records that it has become a habit and financial practice for the credit institutions to entice the customer to take credit cards and purchase things on credit (Scurlock 12). In most instances, the credit bureaus and firms encourage people to spend or borrow to facilitate expenditure even when it would be clear that they are mot best placed to service such expenditure.
Specifically, the book explains the situation and the methods used by the financial firms to market credit to their consumers and customers in general. Intuitively, they have targeted the poor people whose income is little and insufficient to meet their day-to-day wants exhaustively. The banks and financial firms have played to the economic challenges and dynamics of the poor by intending to maximize on their economic challenges and situation (Scurlock 8). For instance, the banks sell the impression that they are willing and able to help the poor overcome their financial troubles by lending them a “helping hand.” From the outset, the repayment terms and rates may appear flexible or even appealing to a person. However, a calculation of the net effect of the repayment rates as compared to the credit given would still leave the customer, an American citizen worse off.
Also, there is the mentality and intuition postulated by the banks and financial institutions that consumers do not necessarily have to be financially stable to enjoy life or order for services offered in the economy. Thus, they suggest that the customers who are not economically well-off may acquire the services and goods that they desire on credit and repay the credit loan over a period on flexible terms (Scurlock 4). Thus, credit is put forth to the general consumers on the disguise that a customer is best placed to enjoy a service and repay at a later date when the customer would be able to repay and service the credit situation.
In the same train of thought and argument, the credit firms sell good and bad credit to different consumers in the same economic state and situation. For instance, the rich people get high credit loans and relatively flexible repayment terms and conditions. It means that the rich and wealthy people would be in a place to qualify or justify a credit as good debt (Scurlock 3). It goes without mentioning and saying that the wealthy people would have other incentives and financial capabilities or avenues to service their debts effectively. For instance, a person who takes credit or a loan to purchase an expensive home would implicitly be in a position to service and repay the loan under the spelled terms. Thus, the credit service would assist such a person to acquire the house or home in this case as they sort out their liquidity issues.
A bad debt would conventionally be incurred by the poor person who would in the process be denied the chance and opportunity of paying the true cost of a good or a service. In most instances, a poor person would be enticed to have things that are out rightly beyond their reach. In the long end, the poor person would be forced to pay a higher price than the ordinary and conventional value assigned to a product (Scurlock 13). Also, some of the products and services that are acquired on credit may not be basic in nature, and the consumer may still comfortably live without them. It would be safe to mention and infer that consumer would be encouraged and enticed to get some of the products and services so as to fit in the society and economic spending cycle. In brief, the customer would be enticed to incur an expensive and unnecessary debt that would leave them worse off regarding the net effect of repayment terms.
James Scurlock mentions and records that the consumers and people who take credit services do not appreciate the fact that credit and wealth are two different concepts. In brief, the book records that “Credit is not the same as wealth.” It implies that in as much as a person may have the purchasing power to acquire goods and services at a particular time, the person cannot be termed as wealthy (Scurlock 5). For instance, a person or a consumer may be able to purchase an expensive house on credit or acquire favorable mortgage service on the same portfolio. However, the cumulative effect of the debt to the consumer shocks the conscience. In the case of any eventuality, the consumer of the loan and credit service might be forced to resell their initially acquired loans and services, or the credit firm may repossess the collateral security acquired by the consumer of the loan.
Similarly, there is the notion of credit services being freely available having moved from a “hard to get” situation and perspective. In the current financial dispensation, it is easy for instance for a consumer to get credit services from the credit institutions without many considerations of collateral or security (Scurlock 4). Thus, it becomes relatively easy for a person to be enticed and given loan and credit since the repayment process would yield a higher return to the lender. Accordingly, it is as though the lending institutions beg or entice people to take credit services because the repayment process would yield higher returns to the lenders.
The book also refers to the people who service their debts and credit cards within the stipulated period as “deadbeats.” The feeling and intuition in this line of thought and argument is that the people especially the poor ones would be unable to repay their credits, and thus the credit companies would repossess their property, impose heavier and punitive rates and fines and, in the long run, get more fees (Scurlock 23). In retrospect, the credit firms and companies pray and wish that a person is unable to repay their loans within the set period so that the credit firms would impose heavier and more punitive fines that would mean that the customer would pay more. Accordingly, the aspect of the consumer paying the credits qualifies them as deadbeats since they would be of little financial gain to the credit firms and bank institutions. Another concept and notion mentioned is the “bear trap” that justifies the financial position and situation of a person. It is to say that prospective customer must be in the “bear trap,” for them to yield more economic sense and value to the credit firms.
In sum, the writer, James Scurlock records that and wonders whether the “society itself is bankrupt,” due to the number of credit facilities and services on the offer (Scurlock 19). There is the general feeling that the American society would be bankrupt if the number of promotional ventures for the credit service is anything to be considered. A person gets the feeling that it may not be economically feasible for a person in the current economic dispensation to finance his or her recurrent expenditure. The general idea is that a person may not be able to live within their income and instead one should get a credit card so as to get to a higher level of welfare. Surprisingly, even the rich people are portrayed and perceived as bankrupt since the credit services also target them.
Scurlock, James. Maxed out: Hard times, easy credit and the era of predatory lenders.
Simon and Schuster, 2007.