US might be a 'nation of deadbeats'
Americans have been paying down debt but walking away from more.
This post comes from Brett Arends at partner site MarketWatch.
A close look at the data reveals a very different story -- and one that gets far too little airing in public discourse.
Far from paying our bills, the current generation of Americans -- or some of them -- have set records for default which probably have no parallel in the history of the human race. During the last five years, U.S. individuals have walked away from a staggering $585 billion in mortgages, credit card debts and other personal loans. That works out at about $6,000 per household.
And if the numbers are to be believed, there is probably a lot more to come.
Turn on any news program devoted to the economy and you will doubtless hear some Wall Street blowhard telling you that American households have been "repairing their balance sheets" and paying down their debts. They make it sound so virtuous, and they often then segue into sneering remarks about those degenerate Greeks and other Europeans who don't behave in the same responsible way.
The truth is very different. According to the Federal Reserve, U.S. household debt peaked five years ago at a gigantic $13.8 trillion. Since then it has declined to $12.9 trillion -- a decline of about 7%. To put that in context, household debts today still exceed those seen at the end of 2006, near the peak of the bubble. They are three times what they were in 1998.
Furthermore, the majority of that reduction hasn't come from people paying off their loans, but from banks writing them off.
The total debt reduction from the peak, says the Fed, is $954 billion. Loan write-offs, at $585 billion, account for 60% of that. In other words, for all the chest-thumping about how Americans are repairing their balance sheets and how we aren't a nation of deadbeats, in the past five years Americans have walked away from $3 in debt for every $2 they've paid off.
In the first quarter of 2010 alone, about 13% of all credit card debt was just written off.
Households weren't alone. Corporations have defaulted on $35 billion to $40 billion in debt per year in recent years, according to Moody's.
Naturally this has occurred even while the federal government has bailed out bankrupt financial institutions, and flooded the economy with massive deficits, low interest rates and free money to make it all easier.
Heaven knows what the situation would have looked like under a system of honest money.
It's easy to get too sanctimonious. Once a country gets itself into a disastrous debt hole, write-offs may be the only sensible way out. After all, for every reckless borrower there was also a reckless lender. If a debt is not going to be repaid, a policy of "extend and pretend," let alone, say, debtors' prison, is not going to help. So maybe deadbeat economics is the way to go.
But let's go easy on the chest-thumping.
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Well the middle class never got a bailout! Wall Street firms were going belly up and the government gave them a 800 billion TARP bailout. Then a fact they kept hid for three years the Fed gave Wall Street banks about 3.5 trillion with an interest of .0003%....The Fed under QE1,2, and now 3 buys U.S. bonds every month.
What has the government done for the working and middle class since Wall Street wrecked the economy and raided the treasury. What bailout did the workers get?...Wall Street said trust me, do away with all the regulations that seperated the banks from Wall Street, then easy credit on houses, cars, credit cards...until the bubble burst. Now they will come in and buy everything they want for pennies on the dollar.
"In the olden days"....you weren't trusted if you didn't pay your bills...you were expecfed not to go to your workplace and demanded a whole lot bigger payment for your work, but to live way below your means and pay your debts off ASAP....
There may be a national lesson here.
P.S. "investing in the future" is codeword for "we aren't going to pay our bills anytime soon...."
OK, ok, that sounds too "old school"..........................................but it sure beats the philosophy that goes around now...which amounts to In Debt, Dumb, and Stupid.
I WANT MY FREE STUFF AND I WANT YOU, THE TAXPAYER, TO PAY FOR IT ALL. I want ipads/iphones and steak and lobster and i want the taxpayer to pay for it all. I want to have free childcare and free healthcare. I want YOU to pay for it so i don't have to work. I want to go to WalMart and buy anything i want and i want you to pay for it. I don't want to work b/c i want you to pay for everything, including my unemployment. I want my kids to NOT work and i want YOU to pay for their college. I want nobama to pay for all the free stuff and then I want the taxpayer to pay for my vacations to Hawaii. I don't want to work and i want YOU TO PAY FOR EVERYTHING I DO. I HAVE FUN SPENDING YOUR HARD EARNED MONEY ON GUCCI BAGS AND CARS. I want free gas too. I want the US taxpayer to pay for all of my fun and all of my children’s fun and future. NOT ONE of my family members will work ever again b/c i can get free stuff from the US government and the US taxpayer. This is the best solution for me and my family so PAY FOR ALL OF MY FREE STUFF!!! AND PAY FOR IT RIGHT NOW!
politicians don't pay their bills. so, who's the deadbeats??? is a deadbeat someone who doesn't pay up??? what's the national debt up to now??? keep spending you doosh (nobama) and then tax the rich to make yourself look good for the poor people??? now, who's the deadbeat???
way to go you doosh!
1) Only in America could the rich people - who pay 86% of all income taxes - be accused of not paying their "fair share" by people who don't pay any income taxes at all.
2) Only in America could people claim that the government still discriminates against black Americans when they have a black President, a black Attorney General, and roughly 18% of the federal workforce is black while only 12% of the population is black
3) Only in America could they have had the two people most responsible for our tax code, Timothy Geithner, the head of the Treasury Department and Charles Rangel who once ran the Ways and Means
Committee, BOTH turn out to be tax cheats who are in favor of higher taxes.
4) Only in America can they have terrorists kill people in the name of Allah and have the media primarily react by fretting that Muslims might be harmed by the backlash.
5) Only in America would they make people who want to legally become American citizens wait for years in their home countries and pay tens of thousands of dollars for the privilege while we discuss letting anyone who sneaks into the country illegally just 'magically' become American citizens.
6) Only in America could the people who believe in balancing the budget and sticking by the country's Constitution be thought of as "extremists."
7) Only in America could you need to present a driver's license to cash a check or buy alcohol, but not to vote.
8) Only in America could people demand the government investigate whether oil companies are gouging the public because the price of gas went up when the return on equity invested in a major U.S. oil company (Marathon Oil) is less than half of a company making tennis shoes (Nike).
9) Only in America could the government collect more tax dollars from the people than any nation in recorded history, still spend a Trillion dollars more than it has per year - for total spending of $7-Million
PER MINUTE, and complain that it doesn't have nearly enough money.
10) Only in America could politicians talk about the greed of the rich at a $35,000.00 a plate campaign fund-raising event.
11) Only in America can a man with no background, no qualifications and no experience ... and a complete failure at his job ... be reelected.
hey morons, the President does have perhaps the hardest job (I know I wouldn't want it) I can think of. So knock off the foolish political rhetoric.
And yes, with that, knock off your self-righteous drivel. You sound like whiny children.
The US has become a nation of armed lunatics. It's about all we do with any effectiveness, is bomb, torture and use the military. Whenever anything else is considered from the government, the practiced refrain is "can't trust the government to do it" and "socialism is killing this country".
No. Crony capitalism is. When the top 2% make 75% of the profits AND have you all sneering at the impoverished person of color milking the system for extra food....
Then you're just proving what was started when this once-great country began sneering at evolution. Lack of significant mental agility is what I'd call a deadbeat, and we (the majority of hard-working folks who don't post on here but giggle at your collective stupidity)...are tired of hearing morons spout. Didn't you 'get the memo' last election? Guns, Christian zealotry and deep-south stupidity are all kinda passe. Now please just move on.
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