The Blinding Light of Debt

In his book If on a winter’s night a traveler, Italo Calvino writes:

They don’t know that I have built my financial empire on the very principle of kaleidoscopes and catoptric instruments, multiplying, as if in a play of mirrors, companies without capital, enlarging credit, making disastrous deficits vanish in the dead corners of illusory perspectives. My secret, the secret of my uninterrupted financial victories in a period that has witnessed so many crises and market crashes and bankruptcies, has always been this: that I never thought directly of money, business, profits, but only of the angles of refraction established among shining surfaces variously inclined. (p. 158)

Sounds like so many of the big companies that are going belly up these days. It’s as if they never thought of “money, business, profits” — but only of never-ending growth no matter how much debt they assumed to continue their expansion.

Debt is much like a blinding light. When you’re first given access to it, all you can see is the glint of light refracting off the shiny plastic: the ability to purchase almost anything you want with a single flick of the wrist.

Soon, that blinding light that once enamored you becomes a source of fear, as if a locomotive were bearing down on you in a long tunnel. You know you will be run over if you don’t move quickly. Escape is nearly impossible. Your breathing comes in short gasps as you sprint down the tracks.

Why did you ever let that light blind you?

And now: You close your eyes and let the darkness of logic return. It’s no time for regret. It’s time to focus, to set yourself to the hard task of restoring proper vision — and financial sanity.

Get to work, you say to yourself.

And so it goes for tens of thousands of Americans who have discovered debt is not as appealing as it first seems.

It’s love at first sight, then infatuation, and finally disillusionment. Best not to be hypnotized by the light in the first place.

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5 thoughts on “The Blinding Light of Debt”

  1. So true on my side of things too. 2:1 margin was great 30:1 must be better, heck why not push 200:1 in the Forex on kids with only 1 or 2 thousand. Craziness.

    It amazes me how many people use credit saying just this time and I’ll pay it off over the next two paychecks only to pay minimum for years.

    -Bill

  2. @Bill – Leverage in the markets is tempting — no matter whether it’s the stock market, forex market, or real estate market.

    I hear some big-time real estate gurus are now going bankrupt because they were over-leveraged. Of course, this hasn’t been widely publicized at this point.

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