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.
More on MarketWatch and MSN Money:
- Can Bieber make prepaid cards cool?
- 10 things your office won't say
- Banks bury fees in the fine print
- Smart Spending on the go: Get our app for Android or iPhone
- New budget fix: Pawn Mount Rushmore?
- Should we all pay more taxes?
Obama then went on to say.......... If China calls, I'M NOT HERE!
(via Conan Obrien show 1/15)
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.
Given the face that we are being charged more taxes that before I can see why.
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...
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!
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!
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 ?
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.
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