Krugman has it right - again!

His latest article concerns the new Bankruptcy law, designed to make it harder to go into bankruptcy, and easier for those who find themselves in debt to stay in debt.

The credit card companies say this is needed because people have been abusing the bankruptcy law, borrowing irresponsibly and walking away from debts. The facts say otherwise.

A vast majority of personal bankruptcies in the United States are the result of severe misfortune. One recent study found that more than half of bankruptcies are the result of medical emergencies. The rest are overwhelmingly the result either of job loss or of divorce.

True story. I get a lot of calls from credit card companies offering me credit cards (all of which I turn down, as I already have a credit card, and my life is hard enough). Once, in a mood of playful frustration, I told the guy on the phone "Look, I'll take the card, but I have to tell you I will run up bills and then not pay them off." He still seemed pretty comfortable giving me the card, but I ended up saying no.

The Credit Card companies have followed a policy of issuing a card to anything with a pulse, and now they are upset that these policies aren't paying off as much as they would like. A few fishes are escaping the net through bankruptcies. As Krugman puts it;

Warren Buffett recently made headlines by saying America is more likely to turn into a "sharecroppers' society" than an "ownership society." But I think the right term is a "debt peonage" society - after the system, prevalent in the post-Civil War South, in which debtors were forced to work for their creditors. The bankruptcy bill won't get us back to those bad old days all by itself, but it's a significant step in that direction.

And any senator who votes for the bill should be ashamed.