Sep 28
Economic Data ignored massive government debt for a bit and charted JUST Mortgage debt and Consumer Debt as a % of national GDP:
The left Y axis is mortgage debt, the right consumer debt. Add them up right now and you get debt levels close to our GDP.
If GDP growth relies on debt growth can both continue to grow with debt at historic and unsustainable levels?
September 28th, 2009 at 2:55 pm
Interesting data, but
1. what does your favorite economist say is the maximum healthy total debt as a percent of GDP? Do most economists agree with that estimate? What is your total debt as a percent of your annual adjusted gross income?
2. “unsustainable” pre-empts Question 1 without answering it.
3. Isn’t debt-powered consumption great fun though? Would you say that your levels of savings and consumption are consistent with your long range financial plan?
September 28th, 2009 at 5:33 pm
I don’t have a favorite economist. I follow what a few say.
But who cares about economists – pick one. This is about common sense. At some point paying interest has to crowd out acquiring more debt. And it looks like both government and people are reaching a similar point.
Since those in charge and many people would benefit from deflating their debt, I expect they will get busy on that right away.
September 28th, 2009 at 7:33 pm
Last I heard 20% of those with consumer debt are walking away from it.
Seems right given the lower CD rates. For $10T and 100M card holders it costs the banks $3,600 a year. Guess who pays for those earrings and outfit some young bimbo waitress just can’t do without for tomorrow night’s party?
September 29th, 2009 at 6:53 am
Unfortunately, inflating away the debt seems to be the only politically doable scheme. When we reached a point a decade ago where we actually ran a temporary surplus that we were using to pay down the debt, the politicians couldn’t stand the temptation. “It’s your money, and the government should be giving it back to you,” said the presidential candidate. So we got big tax cut that benefited the wealthy and a new Medicare program that benefited the seniors. Bye-bye financial responsibility, hello handouts.
September 29th, 2009 at 7:46 am
Tax cut was right. Medicare addition, way wrong. As were many other things Bush did. Alas, now he looks like a miser.
September 29th, 2009 at 9:10 am
I’m not wealthy and i enjoyed the tax cut. I am quite sure #4 is a man of conviction and sent his back to the Treasury. I guess the liberal definition of wealthy is anyone who has a job. #4 is simply repeating the democrat talking points. Old news.
September 29th, 2009 at 9:21 am
blame bush!
September 29th, 2009 at 10:03 am
Bush had deficits in the 400 billion range – too high , but miniscule compared to #4′s man in the white house.
At least some commentators here can bitch about both parties.