Companies & Industries

The Hangover from Our Debt Binge


When you overdo it, you have to pay the price. America is going to have to sober up, work hard, and save money

I was 18 years old. It was great to be in college, with Mom and Dad covering my debt and paying my bills. What a party we had! The booze was flowing. It was Saturday night. The music was loud. Everyone was in a festive spirit. It was time to celebrate! We kept on dancing—and chugging some concoction made from fruit juice, vodka, gin, and anything else we could find. I was so proud of my ability to be one of the top chuggers at our party!

Sometime later, I woke up lying on the kitchen floor. It was cold. I was shaking. I started crawling toward the bathroom. My head was killing me. My throat was dry. I was dirty, and I smelled bad. As I crawled bravely forward, I grew sicker and sicker. I was gagging. I barely made it. I could not stand up, but I feebly rose to my hands and knees, placed my head above the commode, and began to throw up in the toilet. The concoction that I had chugged the night before tasted a lot better going down than it did coming back up. Filled with regret, I wished for death—but my Sunday morning prayers were not answered.

An older—and wiser—friend had missed our festive celebration. He looked in the door, laughed at my pathetic posture, and yelled at some of the other guys, "Hey everybody. Look at Marshall. He is worshipping the porcelain goddess!"

Top Consumers in the World

Although I should have known better in the first place, I learned a hard lesson. When you overdo it, you eventually have to pay the price.

America was 231 years old. It was great to be the richest country in the world, with others countries buying our debt and paying our bills. What a party we had! The money was flowing. Everyone was offering us credit cards. If we couldn't pay one card off, we could just get another and borrow enough to make the payment. If we wanted a new home, we didn't even have to put any money down. Our credit was good—especially since no once seemed to check. Payments were amazingly low. Since house prices would always go up, we could just refinance later—and have money left over to buy more stuff. We were proud to be the top consumers in the world. We just kept on dancing, piling on debt, and drinking up the concoctions of credit.

Then something happened. House prices started plummeting. Instead of producing equity, mortgages went under water. The stock market started falling. Thousands of Americans quit even opening the envelope that showed how little money was left in their 401(k) retirement accounts. All of the toys that were purchased on credit cards don't seem like much fun anymore. The banks that gave away the easy money were no longer so accommodating. In fact, many banks were also broke. They were begging the government for a handout. Our government was asking countries from around the world for money.

Learning a Hard Lesson

Today, thousands of Americans are slowly waking up. They are lying on the floor. They have a throbbing headache. They are on their hands and knees. They are no longer dancing. They are crawling.

America is getting ready to worship the porcelain goddess.

We should have known better in the first place, but hopefully we will learn a hard lesson. When you over do it, you eventually have to pay the price.

Years to Recover

America is facing an incredible load of debt. We are not going to have a small hangover. We are going to have a massive hangover. It is going to take years to recover from the celebration.

Somehow—some way—we are going to have to face up to our mistakes, recognize the error of our ways, and sober up. We are going to have to stop drinking from the fountain of debt. We are going to have to work hard and save money.

The party is over.

We need to pay down our debt.

It's time to get back to work.

Readers: What are your reflections on the current economic crisis? Your thoughts are always appreciated.

Goldsmith's new book, What Got You Here Won't Get You There, was recently listed as America's best-selling business book in The Wall Street Journal. He can be reached at Marshall@MarshallGoldsmith.com, and he provides his articles and videos online at MarshallGoldsmithLibrary.com.

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