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Politics : Ask Michael Burke
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To: Knighty Tin who wrote (119089)8/11/2009 5:13:13 AM
From: Madharry  Read Replies (1) of 132070
 
Getting debt under control
Commentary: U.S. consumers are putting their affairs in order

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By MarketWatch

BOSTON (MarketWatch) -- Even as analysts debate whether the stock market's five-month rally is nearing its end, it's clear that consumers are more interested in paying down their own debts than they in betting on the market.

June marked the fifth consecutive month in which consumers paid down credit cards and shaved other debt, according to the Federal Reserve. In a depressing economy, reducing debt is no surprise, but the Fed's big news was that the amount Americans put into debt reduction was twice as much as economists expected.

All told, the Fed says that Americans cut $10.3 billion off of the wrong side of their balance sheet, or more than 4% of the $2.5 trillion consumers owe. Analysts expected the debt reduction to be closer to $5 billion.

With fear of a violent, sharp market downturn fresh in their minds and with cash and ultra-safe bond investments earning next to nothing, debt-reduction is the best investment most consumers are comfortable making. Every dollar they pay off now, the interest they don't have to pay in the future represents an investment return.

I THOUGHT THE ABOVE WAS PARTICULARLY AMUSING BECAUSE OF THE SLIGHT MATH ERROR. THE REDUCTION IS .4% A DROP IN THE BUCKET.
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