THE average Joe in the US is caught in a vicious circle.

He can't borrow, so he can't buy. If he doesn't buy, the stores lose money. If the stores lose money, he loses his job.

The Globe newspaper used probation officer Don Castle as an example to illustrate this.

He bought his bungalow without putting a downpayment three years ago.

He then treated his first home like an ATM.

He has refinanced twice to help pay for more than US$35,000 ($50,000) in home improvements, including installing 24 new windows, renovating the kitchen, building a deck and replacing the roof.

He now wants to turn his second-floor attic into a huge living space by adding new wiring and insulation but can't get a loan of US$20,000 needed for it, reported the Globe.

Many people did what Mr Castle did, but as housing prices fell, they could not get easy cash.

And their lack of spending hurt US retail stores. Some like Linens 'N Things have declared bankrupcy and one of the biggest home items supplier, Home Depot, has slashed jobs and delayed opening new stores.

These days, Mr Castle, who cut up his credit card after maxing it out last year, is using all the money he has to make his US$2,100 mortgage payment and putting hundreds more a month towards paying off his debt:

• $7,000 in credit cards
• $7,000 in private bank loans
• $30,000 in postponed student loans nowcoming due.

Mr Castle agrees it was risky to borrow so much and that it is his responsibility to pay it back.

But he believes banks should have been more prudent with lending and not let consumers get in over their heads.

Mr Castle has tried to scale back on some of his favourite pastimes, the lunches out and dinners with friends. But what is more painful is the constant reminder of his unfinished dream, the empty second floor.

He told the Globe: 'People aren't getting pay raises, interest rates are going up. Everyone is hurting.'

This article was first published in The New Paper on September 30, 2008.