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US might be a 'nation of deadbeats'

Americans have been paying down debt but walking away from more.

By MSN Money Partner Jan 15, 2013 12:49PM

This post comes from Brett Arends at partner site MarketWatch.


MarketWatch logoPresident Barack Obama said on Monday that "we are not a nation of deadbeats," but instead a people who "pay our bills."


Image: WorriedMan (© Corbis)Really?


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.


More on MarketWatch and MSN Money:


Jan 16, 2013 10:30AM

Obama then went on to say.......... If China calls, I'M NOT HERE!




(via Conan Obrien show 1/15)

Jan 16, 2013 10:29AM

1. There is such a thing as trickle down economics. We take our ques from the government, whether we are aware of it or not. It begins there.

2. There's always 2 sides of a coin. We, as a society, have become unethical. People will do anything for money. We have taught our children to be manipulative and demand the best of everything. When did the goal of surviving become obsolete? Now we're poor if we don't have everything we want. ( Wants are defined by an individual.)

3. Let's take some responsibility here. Reflect on what we can do to strengthen our country. Live within our meager means. Enjoy family life again. Look for ways to live a frugal existence. Then no one can take anything away from you. You are in control. We have given control to the government through our depression and defeatist attitudes. Let the deadbeats do their thing. That doesn't mean we have to. Fight back by not falling for the crap Washington is putting out. If each of us strengthened our personal lives, they have lost. Meet the challenges and overcome them. Take personal responsibility. It took years to get here, it will take some time to return to strength. We can do it, one family at a time.

Jan 16, 2013 10:11AM

Given the face that we are being charged more taxes that before I can see why.

Jan 16, 2013 10:04AM
We are only a country of a little more than half deadbeats. That's the group that elected our supreme chief of deadbeats who supervises the other half that supports the deadbeats.
Jan 16, 2013 9:46AM
well the day of two cars in ever drive  way  is gone for  me  had to sell one  so i could afford to put gas and ins  on the other one  down to paying  my bills  food  gas  ect ect  trying to survive without going  bankrupt . don't really know if it is worth it  the way the government is spending  our  money . there is no way they will ever be able to bal the budget hopeful that i can leave  kids and  grandchildren  a house  so that they will able to have a place to sleep  and  eat  with no house  payment they might be able to  make  it.  a depression is coming and it is not going to be  pretty
Jan 16, 2013 9:08AM

In 2008 American's household debt total was $13.8 trillion. In 2013 it was $12.9 trillion.  Thus a decrease of nearly $1T (taken from the article)


In 2008 American's federal debt total was $10 trillion.  In 2013 it was $18.5 trillion.


Compared to our govenment American's are doing incredible!!!  The sad part is that the American people are ultimately responsible to pay the debt racked up by our government.  Well at least our children are...

Jan 16, 2013 8:56AM
I  looked in the dictionary for  definition of  "deadbeat" .. It  reads:  "... see U.S. Congress..." 
Jan 16, 2013 8:52AM
The  no. 1  deadbeat resides at  1600 Pennsylvania Ave, Washington, DC.
Jan 16, 2013 8:39AM
many ACORNS welfare rats and other assorted losers do not realize someone has to pay that $585 billion. when a loser making 30k a year gets into a 250k home, guess what happens? once again, this country has gone from rewarding hard work and common sense to rewarding failure and "feel good" policies. result: "entitlement mentality" that will eventually destroy this country. the winners will leave or rebuild, and the losers will follow to the trough...
Jan 16, 2013 8:19AM

Wow. What a great story "MSN Money partner".


Now, back to the real world:


Think about this for more than a few seconds please, for it's weight will crush your ignorance as if it never existed.


There is no such thing as "an answer to society's woes". A "woe", is presumed to be another term for problems, or issues? If so, neither of which can ever be completely removed from society. As long as there is a knowledgeable mind and a conscience, imperfection will be everywhere one looks. Some problems, such as the financial one we are in right now, only exists because of the introduction of the currency system in the first place. We are experiencing the inevitable. But, instead of looking at the entire world's future as the big picture, most feel their own native counties are the priority. Whether we like it or not, the entire world is connected, through money. The only true, utilitarian purpose of currency, is to limit the consumption of natural resources. Thousands of years after it's beginning though, it's now used for more sinister acts, such as controlling people and populations. And now, everything you do, from the minute you wake, until just before bed, you have one main agenda. Make money. Most of us don't realize that we are, in fact, paying for our own slavery, literally. Good morning folks. (WAKE UP!) Time to go to work!

Jan 16, 2013 7:57AM
Of course we've become a nation of "deadbeats!" When you have a president and a government full of people that tell you "Don't bother trying or working, just put your hand out and we'll gladly put money in it," you can't help but have a mentality of a waste of life. Then when you top that off with so-called leaders that want to blame everyone else and whine racsism and "You owe me," you get the current United States of It's Not My Fault!! Now try not to do the usual knee-jerk reaction and actually think about this - This began in the 60's with the civil rights movement. I do firmly believe that EVERYONE has equal CIVIL RIGHTS  provided they take equal CIVIC RESPONSIBILITY! However, that was the beginning of the "I'm owed something!" movement and it's killing our nation!
Jan 16, 2013 7:39AM
Deadbeats, Yes we have quite a few, they are called CONGRESS!
Jan 16, 2013 7:34AM
The main deadbeats in this country are in Washington DC.  Throw out the entire lot and start from scratch. 
Jan 16, 2013 5:24AM

A country of greedy people, scam artists, looking for that fast and easy buck, other people mean nothing. This is a different country than I grew up in fifty years ago!

Jan 16, 2013 3:50AM
oboma is right we arn't a nation of deadbeats,,  hes refering to the 31% with collage degrees, who demoralize  thier children into smoking pot and living in the basement until thier parents die off,,  and who at 8/h  can afford  a 42,ooo dollar car and a 238,ooo dollar house unless, you have 100,000 for the degree,  ,  I know thats bad,  however  at least my accounting make sence,,, I need an interpreter for these polititions  thats how stupid the 17 trillion dollar ponzy scam down in washington is,,,  I can pay off all my dept this year,,  who can say that??????
Jan 16, 2013 3:32AM

If the United States Socialist Republicans or USSR, would simply stop expanding government size and spending every time they get the White House we could fix our nation over night.

Nixon added the EPA

Reagan added the DVA

Bush added the TSA, HLS and Medicare D

The party that claims to be the party of smaller government is the one growing it, is it that Republicans don't know how to add or is it that they can't stop adding ?

Jan 16, 2013 3:31AM
One thing that no one mentions is international aid that usually winds up in the hands of war lords and black marketeers. Billions, annually, wind up in foreign coffers. Why does no one mention this? It's all about the dead beats here, what about the dead beats over seas? Why are the citizens of foreign aid countries so much more important than the citizens of the US?

Lets start dropping 25% of that cash into our school systems and attack this issue where it's roots are. How are children going to get past the ignorance that makes them prime recipients of federal aid and into productive tax paying citizens. It sure isn't going to happen by dumping aid into other countries.

Jan 16, 2013 3:13AM
The article should read, We are a nation of Dumb Beats, as housing prices skyrocketed Americans believed that they had to pay double the value of a home just to get one, like homes were going to become extinct soon. It was a panic buying frenzy that tanked our economy. Today we see the same panic buying frenzy with guns and ammo. The right wing wacko networks like Fox News and Rush Limbaugh talk constantly about banning guns 24-7, so dumb azz righties start buying up ammo that leads to an ammo shortage, then Fox says the government is trying to stop ammo sales, so dumb azz righties buy even more ammo causing a bigger shortage, then Fox news says the same about guns and they start flying off the shelves doubling prices at gun shows for AR's. Panic, frenzy buying, hysteria, yes Americans are becoming the  " Dumb Beats "
Jan 16, 2013 3:02AM
Read the first sentence carefully... but instead a people who "pay our bills". That's right we pay the govts. bills they choose to spend it on anything but the bills. This stinking administration just wants more and more of mine and your hard earned money. But no they give it away to all these tree huggers and rock lickers and any other organizations, unions, anyone that will help them get elected and don't give a damn about our own interests. I could go on welfare, food stamps, unemployment get a cell phone and don't have to work for it. Yea, there is the deadbeat. This is the sort of country that's was created by these deadbeat liberals that think they have it all figured out. Don't want to hear the hard core facts. This country is run by deadbeat liberal idiots and you voted them in. So when I hear a liberal bitching about jobs and unemployment, cost of living ,cost of fuel, illegal immigrants it makes me puke. LIBERALISM IS A MENTAL DISORDER.
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