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Why northern Europe is so indebted (2021)

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Re: Why northern Europe is so indebted (2021)

#41

Post by viking1066 »

It would make sense to correct for home ownership rate. With higher rates of home ownership, a higher debt is justified.

For example USA and Germany seems to have about the same level of household debt, but USA has 65% home ownership rate, while Germany has only 51%.

https://en.wikipedia.org/wiki/List_of_countries_by_home_owne...

The other interesting thing is that South Europe in general has a longer history of financing public works like churches, than Northern Europe, but in terms of household debt, that relationship seems inverted.

Re: Why northern Europe is so indebted (2021)

#42

Post by VWWHFSfQ »

It's my understanding that the northern European countries have very low immigration rates which means that their existing (mostly native) population is entirely responsible for their economic growth. That population grows old and fewer and fewer young people are available to contribute to the state-funded "welfare" to support their parents retired lifestyles. So the debt accrues and the country eventually becomes a "welfare state" with young people paying 50-60% of their income to taxes.

Re: Why northern Europe is so indebted (2021)

#43

Post by nonethewiser »

DavidVoid wrote: post #24

As always with debt, how bad it is very much depends on the interest rate of the loans. I bought an apartment here in Sweden a couple of years ago with the minimal required down payment ( kontantinsats ) of 15%, but 20% of my debt is still my student loan that currently has an interest rate of 0.59% (it was 0% a few years ago). I will say that the housing loans here have one potential issue though: it's very common t…

What are the interest rates now? Presumably they are significantly higher than a few years ago. Although maybe there is a delay.

Re: Why northern Europe is so indebted (2021)

#44

Post by robomartin »

cronin101 wrote: post #6

This is such a non-story, mainly driven by the fact that home ownership in Nordic countries is ubiquitous (80% of Norwegians OWN their primary dwelling) combined with the high medium incomes resulting in those houses being quite expensive. I’d really recommend not trying to draw any deeper conclusions from this data. Edit: by “own” I mean “have a non-paid off mortgage”, the tax on net wealth here actually disincentiv…

> 80% of Norwegians OWN their primary dwelling

I see your clarification. Question: In Norway, if you pay-off your mortgage, do you still owe annual taxes on your property? If so, how much? What happens if you don't pay property taxes?

One of the things that has always bothered me about home "ownership" is that, from my perspective, at least in the US, you never really own your home. You can pay off your mortgage, of course. However, if you stop paying property taxes you can lose your property in a forced sale.

That is not my definition of owning something. If it can be taken away, you do not own it. We have somehow been led to believe we can own property. I don't think that's the case. If you own your property it should mean that you can live there with zero income and have nothing to pay anyone except for the things you want to pay for (power, gas, connectivity, whatever).

Someone might say: We need taxes to pay for X. Well, sure. I get that. We should get that money through other means, not through a system where people work their entire lives to pay off a mortgage only to discover they will have to keep paying to "own" that home for the rest of their lives. Perhaps the distinction should be your residence vs. investment/rental property. Not sure. Haven't through it through much deeper than that.

Re: Why northern Europe is so indebted (2021)

#45

Post by mikl »

Maybe over a decade of near-zero interest rates could have something to do with it?

The cheaper it is to borrow money, the more people borrow, unsurprisingly.

This is what’s been driving the massive rises in property prices the last many years. It’s straight out of “Economic Bubble Creation 101”.

Re: Why northern Europe is so indebted (2021)

#47

Post by chucksmash »

Hamuko wrote: post #25
djbusby wrote: post #22

Earlier quoted context omitted.

USA. Eg: Seattle has lots of out-of-state migrants, as does SFBay, Boston and NY.

What's the source for that? Doesn't sound right when I've seen claims such as "nearly 72% of Americans live in or close to the city where they grew up" [1] and "the typical adult lives only 18 miles from his or her mother" [2]. [1] https://www.prnewswire.com/news-releases/what-percentage-of-... [2] https://www.nytimes.com/interactive/2015/12/24/upshot/24up-f...

The irony of having this discussion on a site run by people who pay potential founders to move across the continent for a couple of months.

Re: Why northern Europe is so indebted (2021)

#48

Post by nonethewiser »

ajsnigrutin wrote: post #38
Hamuko wrote: post #16

Earlier quoted context omitted.

Where the hell are people "moving across the continent every few years"?

https://www.census.gov/topics/population/migration/guidance/... This is geoblocked in slovenia, but the google summary says: > Using 2007 ACS data, it is estimated that a person in the United States can expect to move 11.7 times in their lifetime If we neglect the student ages for those without student housing or living nearby, most people here move from their parents to their own place, maybe again if they're rentin…

You didn’t address the “across the continent every few years” part. Moving frequently on average in no way indicates they are moving across the country every few years.

Re: Why northern Europe is so indebted (2021)

#49

Post by jopsen »

DavidVoid wrote: post #24

As always with debt, how bad it is very much depends on the interest rate of the loans. I bought an apartment here in Sweden a couple of years ago with the minimal required down payment ( kontantinsats ) of 15%, but 20% of my debt is still my student loan that currently has an interest rate of 0.59% (it was 0% a few years ago). I will say that the housing loans here have one potential issue though: it's very common t…

I live in Denmark, got 15 year mortgage at 0.5% (1% including fees)..

But the variable mortgages are a bit sketchy, they could very well be a bomb under housing market -- and could cause prices to collapse.

Re: Why northern Europe is so indebted (2021)

#50

Post by JUNGLEISMASSIVE »

engineeringwoke wrote: post #32
dijit wrote: post #30

Earlier quoted context omitted.

Last time I looked at statistics Swedens debt to GDP was 35%, one of the lowest I saw, which doesn’t really make sense to me when I consider the weakness of the currency, but then again I am just a humble engineer and I have no clue about these things. UK is close to 100% debt to GDP at the moment, the highest in recorded history.

The big issue in northern Europe is private debt, not government debt. Totally reasonable to not know

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