One man's debt is another man's financial asset.
Yes but those assets are owned by the rich. I'd wager increased debt correlates strongly with increased inequality.
Americans Hold Over $4.1T in Consumer Debt
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Re: Americans Hold Over $4.1T in Consumer Debt
#22Earlier quoted context omitted.
With this attitude, you might as well just give all your money to the bankers now and just be done with it.
> With this attitude, you might as well just give all your money to the bankers now and just be done with it. With what attitude? Having knowledge of accounting, and that the balance sheet has two sides? If anything, ignorance of finance is how you give your money to the bankers.
> If anything, ignorance of finance is how you give your money to the bankers.
I don't think it's quite that simple. It's probably some combination of a number of factors such as:
* Inability to control one's spending
* A consumer-driven culture where status is equated with material possessions
* Availability of easy credit
* Society not recognizing compulsive spending as an addictionRe: Americans Hold Over $4.1T in Consumer Debt
#23The most dangerous problem with the housing crisis in 2008 was not the amount of debt. It was the feedback loop that was created by defaulting on that debt. Foreclosed homes naturally have a lower value than non-foreclosed homes. Homes are priced by looking at recent comparable home sales. If your neighbors to both your right and left have had their houses foreclosed on, the value of your home will go down. If the va…
> Homes are priced by looking at recent comparable home sales. If your neighbors to both your right and left have had their house foreclosed on, the value of your home will go down.
Surely the lower valuation on your home is incorrectly low, though? Or is there some actual reason why buyers would want it less?
Re: Americans Hold Over $4.1T in Consumer Debt
#24Combine low wages, increasing loan delinquency, and the probable start of trade wars with mexico and china and I can't see how this doesn't turn out to be like 2008 on steroids.
Does America really have low wages? Granted, the lack of a minimum wage is crazy, but the median household income is $56k. Compare that to £23k in the UK.
Re: Americans Hold Over $4.1T in Consumer Debt
#25One man's debt is another man's financial asset.
which is the taxpayers "troubled asset" which has to go into a "Relief program" which somehow translates into Socialism for the hyper-rich and indentured servitude for everyone else.
when you default you lose your home, when they default they get a trillion dollar cheque from the government, and 10 million dollar performance bonus.
Re: Americans Hold Over $4.1T in Consumer Debt
#26One man's debt is another man's financial asset.
Not necessarily, thanks to "leverage".
Re: Americans Hold Over $4.1T in Consumer Debt
#27The most dangerous problem with the housing crisis in 2008 was not the amount of debt. It was the feedback loop that was created by defaulting on that debt. Foreclosed homes naturally have a lower value than non-foreclosed homes. Homes are priced by looking at recent comparable home sales. If your neighbors to both your right and left have had their houses foreclosed on, the value of your home will go down. If the va…
> Homes are priced by looking at recent comparable home sales. If your neighbors to both your right and left have had their house foreclosed on, the value of your home will go down. Surely the lower valuation on your home is incorrectly low, though? Or is there some actual reason why buyers would want it less?
It is a supply and demand problem. Your house is only worth what someone will pay for it. If the potential buyers have several cheaper foreclosed homes to buy instead of your home, the potential sale price of your home will go down
Re: Americans Hold Over $4.1T in Consumer Debt
#28The most dangerous problem with the housing crisis in 2008 was not the amount of debt. It was the feedback loop that was created by defaulting on that debt. Foreclosed homes naturally have a lower value than non-foreclosed homes. Homes are priced by looking at recent comparable home sales. If your neighbors to both your right and left have had their houses foreclosed on, the value of your home will go down. If the va…
> Homes are priced by looking at recent comparable home sales. If your neighbors to both your right and left have had their house foreclosed on, the value of your home will go down. Surely the lower valuation on your home is incorrectly low, though? Or is there some actual reason why buyers would want it less?
The banks use "comps" to figure out the maximum loan value. Assuming the housing nearby as similar, their actual sale price provides the price signals markets crave.
Re: Americans Hold Over $4.1T in Consumer Debt
#29The most dangerous problem with the housing crisis in 2008 was not the amount of debt. It was the feedback loop that was created by defaulting on that debt. Foreclosed homes naturally have a lower value than non-foreclosed homes. Homes are priced by looking at recent comparable home sales. If your neighbors to both your right and left have had their houses foreclosed on, the value of your home will go down. If the va…
> Homes are priced by looking at recent comparable home sales. If your neighbors to both your right and left have had their house foreclosed on, the value of your home will go down. Surely the lower valuation on your home is incorrectly low, though? Or is there some actual reason why buyers would want it less?
Because the market is flooded with similar houses for cheaper.
Re: Americans Hold Over $4.1T in Consumer Debt
#30The United States has a total resident population (as of January 23, 2017) of 324,420,000 people (about 324 million). Source: https://en.wikipedia.org/wiki/Demographics_of_the_United_Sta...
Thus, $4.1 trillion in consumer debt works out to $12,638 per person.
The Gross Domestic Product (GDP) in the United States was worth 18036.65 billion (about $18 trillion) US dollars in 2015. That is about $55,424 per person.
Note that the "consumer debt" is divided into several categories.
Student loans represent a long term investment and may be reasonably paid off over decades.
Auto loans are typically paid off in 3-5 years.
Ideally, credit card debt should be paid off immediately. It is difficult to evaluate credit card debt because credit cards have increasingly become the substitute for cash in the United States. How much of the debt is extremely short term and essentially represents what used to be cash transactions?
What is "other" consumer debt -- payday loans? IOU's?
The point is that $4.1 trillion in consumer debt in a nation with over 300 million people and a GDP over $18 trillion per year is neither unreasonable nor a crisis, particularly when that debt includes longer term items such as auto loans and student loans.