Heinz Blasnik- Views You Can Use Message Board

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Strategies & Market Trends : Heinz Blasnik- Views You Can Use

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To: GraceZ who wrote (533)	4/29/2003 11:12:23 AM
From: philv	Read Replies (1) of 4912

You are saying as long as you can afford it, there is no limit to debt? That of course is the classic argument. Debt need not be repaid, but always "serviced". National debt compared to GDP is low, or personal debt compared to income is low, so keep on borrowing, lots of green space yet. It works as long as it works, but what happens if income drops, or interest rates rise, or God forbid, you can't borrow anymore? It isn't just the ability to service the debt, it is the prospect of ever rising debt without the assurance of ever rising ability to service it. Especially if the debt has been misallocated into a non-performing bubble. The red flags are flying high when you have to borrow money to pay the interest on the debt, whether on a personal or national level. And there are lots of examples out there with predictable consequences. I read an article stating that the US national debt will double to 12 trillion within 10 years. How much is too much?

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