(10-22-2011, 12:07 AM)Concillian Wrote: Non-savers are absolutely catered to in the US. They end up in the same situation they started (without savings) but able to blow hundreds of thousands of dollars in the meantime. Not just the homeowners, I have examples of people who do it with credit cards and bankruptcy too. These aren't things I've heard from the news either, these are people I have actually know.
If lenders are being stupid (and they were), they're the ones that set the credit conditions. Credit card companies and banks are businesses - they lend out money, and get it back at profit. They are responsible for whatever due diligence ex ante. The government sets the rules, but the credit industry plays by them. If they didn't want to play the game, nobody is forcing them. That's not catering to non-savers, that's making a high risk gamble, and losing.
Indeed, from the standpoint of strict economic rationality, somebody who can borrow hundreds of thousands and walk away, probably should. It's free money, and in a free society, businesses are allowed to be stupid.
The question is who ends up getting stuck with the cheque at the end. So long as the answer is "investors," then that's just another part of risk and return. If the answer is "taxpayers," then the banks succeeded in passing the buck - but that hits all income earners, not just savers. In that case, it would be the banks, not savers, being catered to, as their downside risk is covered by the government, who has no share of the upside profits.
So long as there is depositor insurance, what's the risk to savings? No depositor lost their piggy bank, even in the latest crash.
-Jester