31–40 of 208 posts
Americans Hold Over $4.1 Trillion in Consumer Debt and Roughly $90.0 Trillion in Asset Wealth doesn't quite have the same ring to it.
Combine 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.
Combine 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.
Every time you hear a politician advocating more student loans (rather than more affordable higher ed), one of the reasons they do this is because student loans are non-dischargeable.
Think about someone who is 18 and takes on lots of debt. There would be very little reason not to declare bankruptcy, and just live off of wages for 5-7 years until the bankruptcy is cleared from his/her credit report.
With the housing crisis, most debtors also owned some equity in the house, which was a massive incentive not to foreclose, yet many still did.
But with consumer debt there is no downside. You can just choose not to pay it. The collections industry uses some marginally-illegal tactics to create personal embarrassment, but that's where it ends.
With an auto loan the car can be repossessed, but you can pay your rent using a credit card or buy a new TV every few months and if you fail to pay back the debt nobody is going to force you to give up those items. As with education, once the money has been used nothing the creditor does can take away the item, which is why the debt had to be made non-dischargeable.
I think we can look forward to a new class of non-dischargeable consumer debt which will initially be sold via lower interest rates, but will become the sort of debt that college campus credit card pushers will mainly be slinging.
There is really no political opposition to this anymore, now that both parties are so strongly aligned with the finance industry.
I'd also expect to see the credit report become something somewhat more like a "trust dossier" that would routinely be viewed by employers and other entities we all work with who do not typically view the data, and would include things like TSA precheck status, IRS timely filing information, immigration status, etc.
There's a reason debtors prisons used to exist, which is that the human optimism that can get us through great hardship can also tend to lead many humans to be overly optimistic about their ability to repay debt. It takes a very firm hand to create compliant borrowers. In the US, the older generation views missing a credit card payment as a really big (and embarrassing) deal, but the younger generation does not care as much about this.
The occupy movement was a backlash against the shackles of student debt, but was shut down relatively efficiently. The next iteration has fewer principled objectors but a lot more debt cynics who view consumer debt more as something to be exploited.
The 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…
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.
Earlier quoted context omitted.
also "subprime financial products bundled together and resold as low-risk investments to massive institutions" combined with "moral hazard" of said institutions knowing they will be bailed out again by the taxpayers when the speculative bubble bursts. also Student Debt cannot be forgiven in bankruptcy so you essentially have an entire generation of indentured servants who will never actually own property outright.
> also Student Debt cannot be forgiven in bankruptcy so you essentially have an entire generation of indentured servants who will never actually own property outright. This is an issue, but can vanish with the stroke of a pen.
The 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…
It sounds like the actual most dangerous problem was people financing homes on unsustainable lending terms, literally requiring the home value to go up so you could refinance before your ARM teaser rate expired.
Combine 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.
The 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…
> Foreclosed homes naturally have
> a lower value than non-foreclosed
> homes
Americans Hold Over $4.1 Trillion in Consumer Debt and Roughly $90.0 Trillion in Asset Wealth doesn't quite have the same ring to it.
The debt is real, the wealth not necessarily. But a more telling measure would be debt per capita or debt vs liquid assets. The financial crisis showed us that 20 trillion can be erased relatively quickly. http://www.huffingtonpost.com/2013/02/14/financial-crisis-co...
Edit: I'm not trying to suggest some kind of Fight Club-esque reorganization of society's financing structures. I'm just talking about the way that debt tends to get fractionally charged off when it goes to collections.