I went through a similar exercise back in April, and came to a similar conclusion. Which is why I don't think we're going to have a financial melt-down, as some do.
But there's no doubt we're in a slow-down.
Also no doubt that debt is higher than it has been in the past. When you break it down into separate components and look at each individually, it's not all that much more than it has been in the past, and some of the debt isn't scary at all, e.g., more people have bought houses than ever before in history, many using low or no downpayment plans. But the combination of higher debt and slowing economy are worrisome.
One factor that no one has spent much time discussing on the thread, not in depth, anyway, is the vast increase in debts which are guaranteed by the federal government, e.g., mortgage debt and student loan debt, not to mention FDIC. I find this reassuring, personally, because I think Uncle Sugar is good for it, but most find it worrisome.
I think some of the big contributors to US prosperity in the 1950's were the VA mortgage so veterans could buy houses and the VA loan so veterans could go to college. Maybe we're actually creating more prosperity with all this debt. I guess we'll find out. |
