Over the past 20+ years I have counseled hundreds and hundreds of individuals, families and businesses on the full gambit of financial decisions from budgets and planning, divorce, bankruptcy, litigation and all forms of negotiated financial settlement.
One constant throughout is that no one likes to make do with less than they are accustomed to. So long as people are able to fund themselves through access to capital or more credit, most will not change behavior even when it is clearly leading them to financial suicide. Once cash flow cannot be expanded or continued however, once payments from others and credit lines are cut, most people figure out the changes needed to survive.
The culture of entitlement engendered over the past many years, enabled via “financial securitization” (a euphemism for leverage suicide) has brought the western world to a tipping point. This clip explains the plain math of the US fiscal deficit, but it really highlights the challenges facing most of the world today.
Zeros will have to be wiped off of debts globally and credit lines will need to be closed (or the debts will just grow back), inflated asset values will need to be written down, spending habits will need to be changed and individuals will learn to be more accountable and self-reliant–spend less and benefit more. In the new post-debt bubble world, we cannot afford the wasteful habits we have developed over the past 30 years. Efficiency and financial honesty about what we can actually pay for, must be the new model.