THE DEBT THREAT
THE DEBT THREAT
By Patricia Nell Warren
Copyright © 2007 by Patricia Nell Warren. All rights reserved.
Originally published in Frontiers Magazine, July 2007
Also posted at the Bilerico Project
For weeks, gay media are buzzing that the big PlanetOut merger venture is in big trouble. Just a year and a half ago, PNO became the first gay-owned stock traded on the NASDAQ. As its price soared to $10 a share, CEO Lowell Selvin announced glowingly that the merger would “move us out of the gay ghetto and into a whole new gay world." Meanwhile gay media regale us with rosy advertising studies on the rise to power of the pink consumer.
Now that rosy glow is fading a bit, as PlanetOut showed a $6.9 million loss in the first quarter of this year, and the stock plummeted to less than $1 a share. While pundits speculate on what went wrong at PNO (mismanagement? hubris?), pessimists predict a big black eye for the gay business world if PNO goes Chapter 11.
But nobody is talking much about a bigger, scarier problem. The fact is, many thousands of those pink consumers are in big financial trouble themselves.
For decades Americans have worried about our country’s public debt, which reached a staggering $4.9 trillion in 2006. Just as scary is the private debt, meaning the total owed by millions of consumers. Since the launch of liberalized credit in the 1980s, private debt has skyrocketed to an equally staggering $3 trillion today. The old yardstick of the GLBT ten percent suggests that we own at least ten percent of that $3 trillion.
TV advertising insists that most Americans plunge into debt in reckless pursuit of luxuries. In the gay world, the double-income-no kids thing created a “spend, spend, spend” climate among A-list folks. But many of us are low- and middle-income. In recent years, with costs soaring ever higher and incomes stagnating, many people alike started using credit cards, re-fi's and home equity to cover basics –- housing, healthcare, student loans, transportation, even food. Credit-card debt has almost tripled in the last five years.
During the last year, a national tipping point on private debt was felt, like an L.A. earth tremor. According to Consumer Affairs, bank foreclosures on homes shot up 47 percent. Six out of 10 American households are falling behind on credit-card payments. Mortgage companies are closing, or going into mergers or layoffs, because of defaults. Banks are belatedly scrambling to throw lifelines to debtors, because sales are soft on foreclosed properties. Despite a new federal law that attempts to curb bankruptcies, filings are up by 422 percent, from slightly under 300,000 in 1980 to 1,500,000 today.
How many of those credit-card defaults, foreclosures and those million-and-a-half filings are happening to people in our own community? Hard figures are a little hard to come by. A recent UK study reveals that GLBT individuals have almost twice the credit-card debt of non-gay people. But in the U.S., judging by the recent explosion of GLBT debt-counseling websites and blogs like QueerCents.com across the Web, a disproportionate percentage of those statistics are pink people mired deep in the red.
Why might our demographic debt-curve be higher than that of most non-gay people? Per Larson, openly gay and widely published financial writer/consultant, says: “Market research says we have higher average incomes than straights. The average straight American has but a few weeks or months of salary in the bank….Market research reveals that our incomes are well above average because we equip ourselves with better skills to survive, because we're more mobile, because we've learned to live with risk, and because we simply don't invest in children and nonworking spouses. We not only earn more; potentially we can keep more.”
So, Per Larson asks, “Why is debt such a threat to our community?” On his website, GayMoney.com, he discusses what he calls our Achilles heel. “Our key weakness, that which often holds us back from the advantages that can come from being lesbian or gay, lies in our money connection to society at large. …Some of us compensate for discrimination by building expensive fortresses, filled with furniture and things. Some of us try to pass for straight by literally buying into America's consumer society, seeking acceptance by buying society's status symbols. Some of us get carried away with the freedoms of our lifestyle, losing some of society's financial wisdoms in the process. Some of us are so focused on our youth that life becomes one giant revolving credit card.”
If we want to understand the turmoil that might be going on with community-owned big business right now, and whether one high-profile gay-owned corporation may go into Chapter 11, we will have to hope that new market studies give us more real-life facts about the pink dollar. Out-of-control personal debt will surely impact the ability of each of us to sustain an independent and productive life outside of the closet.
By Patricia Nell Warren
Copyright © 2007 by Patricia Nell Warren. All rights reserved.
Originally published in Frontiers Magazine, July 2007
Also posted at the Bilerico Project
For weeks, gay media are buzzing that the big PlanetOut merger venture is in big trouble. Just a year and a half ago, PNO became the first gay-owned stock traded on the NASDAQ. As its price soared to $10 a share, CEO Lowell Selvin announced glowingly that the merger would “move us out of the gay ghetto and into a whole new gay world." Meanwhile gay media regale us with rosy advertising studies on the rise to power of the pink consumer.
Now that rosy glow is fading a bit, as PlanetOut showed a $6.9 million loss in the first quarter of this year, and the stock plummeted to less than $1 a share. While pundits speculate on what went wrong at PNO (mismanagement? hubris?), pessimists predict a big black eye for the gay business world if PNO goes Chapter 11.
But nobody is talking much about a bigger, scarier problem. The fact is, many thousands of those pink consumers are in big financial trouble themselves.
For decades Americans have worried about our country’s public debt, which reached a staggering $4.9 trillion in 2006. Just as scary is the private debt, meaning the total owed by millions of consumers. Since the launch of liberalized credit in the 1980s, private debt has skyrocketed to an equally staggering $3 trillion today. The old yardstick of the GLBT ten percent suggests that we own at least ten percent of that $3 trillion.
TV advertising insists that most Americans plunge into debt in reckless pursuit of luxuries. In the gay world, the double-income-no kids thing created a “spend, spend, spend” climate among A-list folks. But many of us are low- and middle-income. In recent years, with costs soaring ever higher and incomes stagnating, many people alike started using credit cards, re-fi's and home equity to cover basics –- housing, healthcare, student loans, transportation, even food. Credit-card debt has almost tripled in the last five years.
During the last year, a national tipping point on private debt was felt, like an L.A. earth tremor. According to Consumer Affairs, bank foreclosures on homes shot up 47 percent. Six out of 10 American households are falling behind on credit-card payments. Mortgage companies are closing, or going into mergers or layoffs, because of defaults. Banks are belatedly scrambling to throw lifelines to debtors, because sales are soft on foreclosed properties. Despite a new federal law that attempts to curb bankruptcies, filings are up by 422 percent, from slightly under 300,000 in 1980 to 1,500,000 today.
How many of those credit-card defaults, foreclosures and those million-and-a-half filings are happening to people in our own community? Hard figures are a little hard to come by. A recent UK study reveals that GLBT individuals have almost twice the credit-card debt of non-gay people. But in the U.S., judging by the recent explosion of GLBT debt-counseling websites and blogs like QueerCents.com across the Web, a disproportionate percentage of those statistics are pink people mired deep in the red.
Why might our demographic debt-curve be higher than that of most non-gay people? Per Larson, openly gay and widely published financial writer/consultant, says: “Market research says we have higher average incomes than straights. The average straight American has but a few weeks or months of salary in the bank….Market research reveals that our incomes are well above average because we equip ourselves with better skills to survive, because we're more mobile, because we've learned to live with risk, and because we simply don't invest in children and nonworking spouses. We not only earn more; potentially we can keep more.”
So, Per Larson asks, “Why is debt such a threat to our community?” On his website, GayMoney.com, he discusses what he calls our Achilles heel. “Our key weakness, that which often holds us back from the advantages that can come from being lesbian or gay, lies in our money connection to society at large. …Some of us compensate for discrimination by building expensive fortresses, filled with furniture and things. Some of us try to pass for straight by literally buying into America's consumer society, seeking acceptance by buying society's status symbols. Some of us get carried away with the freedoms of our lifestyle, losing some of society's financial wisdoms in the process. Some of us are so focused on our youth that life becomes one giant revolving credit card.”
If we want to understand the turmoil that might be going on with community-owned big business right now, and whether one high-profile gay-owned corporation may go into Chapter 11, we will have to hope that new market studies give us more real-life facts about the pink dollar. Out-of-control personal debt will surely impact the ability of each of us to sustain an independent and productive life outside of the closet.
posted by Carlos T Mock @ 7:57 AM
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