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Americans Hold Over $4.1T in Consumer Debt

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Re: Americans Hold Over $4.1T in Consumer Debt

#191

Post by cmdrfred »

coliveira wrote: post #120
adventured wrote: post #79

Earlier quoted context omitted.

Where isn't that true in the developed world currently? Very few places. Take a look at the extreme household debt to income ratios in Denmark, Sweden, Canada, etc. Look at the completely collapsed savings rate in Japan (stacked against their catastrophic budget / public debt situation that demands ever greater funding, while the economy has near zero spare taxing capacity). Japan has seen their real standard of livi…

The difference is that in the US there little social support for people who lost their jobs. Even employed people have a comparable lower standard of life, because there are so many social services available in Eastern EU countries not available in the US. Just for the biggest example, consider that Americans have no public option for health care, so if they lose a job their lives are at risk.

Perhaps that lack of social support (and thus lower taxes) is the very reason why the US is not in the same situation as the Eastern EU.

Re: Americans Hold Over $4.1T in Consumer Debt

#192

Post by mcguire »

TheOtherHobbes wrote: post #50
NumberSix wrote: post #30

The 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…

Other consumer debt includes mortgages. I'm sure there were people making similar arguments about the health of the US economy before 2008. http://inflation.us/wp-content/uploads/2015/04/niareport84.j...

Both of these statements are true.

Re: Americans Hold Over $4.1T in Consumer Debt

#193

Post by mcguire »

dpweb wrote: post #31
purple-again wrote: post #14

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...

I wonder what the NCAV of the US is?

Re: Americans Hold Over $4.1T in Consumer Debt

#194

Post by mcguire »

IshKebab wrote: post #174
tzakrajs wrote: post #32

Earlier quoted context omitted.

Are suggesting that the US does not have a minimum wage?

I assumed so given all the comments I've read about people getting paid $2/hour. I stand corrected!

It is minimal, though: $7.25/hr federally.

Re: Americans Hold Over $4.1T in Consumer Debt

#196

Post by mcguire »

mortehu wrote: post #20

For lots more data and charts, see New York Fed's quarterly report on household debt and credit: https://www.newyorkfed.org/medialibrary/interactives/househo... Page 13 shows newly delinquent balances by loan type, and the trend doesn't seem too worrying. Page 11's "total balance by delinquency status" also seems to be heading in a good direction.

What happened to bankruptcies in 2006? They dropped significantly.

Re: Americans Hold Over $4.1T in Consumer Debt

#197

Post by jimmywanger »

snowwrestler wrote: post #175
jimmywanger wrote: post #138

Earlier quoted context omitted.

> Which means that even if the property only appreciates at the rate of inflation, your investment will grow faster than inflation. Incorrect. You're also paying interest on the loan, which is usually pretty close to inflation. No matter how you slice it, you're pretty close to breaking even. Also, you're not getting paid interest on the cash outlay you make the acquire the property, which is another loss. > Voila: t…

When you rent, you are also paying interest on a loan--just not your loan. Unless you think that only 100% paid-for properties are rented out, or that property owners rent out their property for less than their own monthly payment. Yes leverage is just a tool. The point is, a mortgage creates leverage and it's silly to ignore that when thinking about return. > The longer you go in your career, the less people care wh…

> When you rent, you are also paying interest on a loan--just not your loan.

Actually, you're paying somebody who also might be paying interest on a loan. What happens to money after you pay it is immaterial. You're not paying interest on a rent debt you've accumulated.

> The point is, a mortgage creates leverage and it's silly to ignore that when thinking about return.

You're spinning it in terms of pure rewards. When you leverage your money on an investment which can have value go both up and down, you're just magnifying your exposure. Of course, if you can find an investment that's guaranteed to go up, of course you should leverage yourself to the hilt. If that's the case, go buy up some tulip bulb.

> This is speculation by you. Again: note how many resumes keep college on them.

And also by you - if we did an A/B test based on years of experience vs college, we can see whether that matters or not. Everything else is speculation.

> you think that salaries for people with degrees grow more slowly than for people without degrees.

Of course they do. If you start off earning 30k as a high school dropout doing the same job as somebody earning 60k who has a degree, your wage will rise more quickly if you perform at the same level.

Re: Americans Hold Over $4.1T in Consumer Debt

#198

Post by cnnsucks »

bamboozled wrote: post #181
cnnsucks wrote: post #170

Earlier quoted context omitted.

Yes, it's real. Lenders have computers that sum lots of accounts; they're expected to do that and disclose how much they've lent. $4.1E12 isn't really that difficult to relate to. Just amortize it across the US population of 325 million. That's $12,612 per citizen. It's also about one year of Federal spending. It's a negative thing. Both individual debt load the and the rate of delinquency has been increasing, with s…

Thank you for the response! I've actually been thinking about the implications of student debt for a while and it seems like a really terrible thing for a lot of reasons. I think it sucks people are forced into jobs they probably wouldn't otherwise do, just to pay off some debt. The only thing I'll say about your response is that, I frequently hear about "the bubble getting ready to burst", but it never seems to happ…

>> forced

There is no force involved; please maintain perspective. There are no debtors prisons filled with 20-something Berkeley graduates. Every penny of every student loan was voluntarily assumed by the debtors. The terms for much of this debt allow payments to be deferred based on income. The average amount of student debt being carried is typically less than the cost of a new car. We deal here with "first world problems."

>> but it never seems to happen

2008? TARP? "Great Recession"?

It clearly registers on every measure of economic activity I've seen. Rather hard to miss, really. You can have a look and the 07-08 collapse of property values over here if you missed it:

https://en.wikipedia.org/wiki/United_States_housing_bubble#/...

Re: Americans Hold Over $4.1T in Consumer Debt

#199

Post by snowwrestler »

jimmywanger wrote: post #197
snowwrestler wrote: post #175

Earlier quoted context omitted.

When you rent, you are also paying interest on a loan--just not your loan. Unless you think that only 100% paid-for properties are rented out, or that property owners rent out their property for less than their own monthly payment. Yes leverage is just a tool. The point is, a mortgage creates leverage and it's silly to ignore that when thinking about return. > The longer you go in your career, the less people care wh…

> When you rent, you are also paying interest on a loan--just not your loan. Actually, you're paying somebody who also might be paying interest on a loan. What happens to money after you pay it is immaterial. You're not paying interest on a rent debt you've accumulated. > The point is, a mortgage creates leverage and it's silly to ignore that when thinking about return. You're spinning it in terms of pure rewards. Wh…

> Of course, if you can find an investment that's guaranteed to go up, of course you should leverage yourself to the hilt.

It's worth pointing out that the post I'm replying to stated that housing prices generally track inflation, which is upward. My point is simply that leverage permits a return higher than inflation under those circumstances. I wouldn't claim that housing prices are some sort of "sure thing," and I don't think I did.

> And also by you

Yes, but the difference is I know I'm speculating.

Unless you've got some actual data to bring, I'm not interested in a guessing contest.

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