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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 12:33PM

The posters on this article appear to have not bothered to read it before expressing their views of the Government.

This, despite the fact that the article is about our personal debt & how we handled it.

It is sad to see that no one seems to realize that the government has not defaulted on its debt, although there are some in the Congress who seem to favor that approach, while many in their personal finances have defaulted, and chosen to be "deadbeats".

Jan 16, 2013 12:30PM

How about the fact that I don't owe anything to anyone? Even my mortgage is paid off. Can I thump my chest about that?


Here's a little advice for the "debt ridden." If you can't pay for it, don't buy it. The ONLY exceptions should be a house and a sensible car and you should drive that car as long as you can.


Jan 16, 2013 12:27PM
yes we are a dead beat country,raising the debt limit should have lowered our credit rating as many times as they raised it.
Jan 16, 2013 12:26PM
The United States IS  a  nation  of  has  been  going  this way  since this  idiot  became  president.It  is   going  to get  worse  during  the  next  4  years.I  HAVE  ONE  DREAM...THAT  THIS  COUNTRY  DEFAULTS  ON  ITS  DEBT  AND  BECOMES  A  FULL BLOWN  BANANA  REPUBLIC.Republicans  and  the  conservative  talking  heads  do  nothing  but  talk  and  are as  corrupt  as  the  queer  party  democrats.
Jan 16, 2013 12:12PM

you people are so full of yourselves its ridiculous. The federal deficit isn't from helping the less advantaged in our country. It's from years of senseless wars, excessive military spending, trying to buy allies, and out right fraud and stealing from government funds.

I worked so hard and their giving my tax dollars away. So do millions of us, but helping people in our own society improves life for all, less crime, less hate, less violence.

that what you do for the least of us, is what awaits you.

Jan 16, 2013 12:03PM
This is what you voted for ,Hope you enjoy yourself and your elected offical when the county goes broke by supporting other countrys and all the deadbeats here!
Jan 16, 2013 12:01PM

Accountability has been destroyed by the governemt and media.  You are legally allowed, and encouraged, to weasel your way out of any bad decisions you make. Get pregnant -have an abortion, murder somebody - 2 to 5 years is good enough, overspend - file bankruptcy, don't go to work - get entitlements, don't like the contract you signed -don't honor it, don't want to raise your kids - make the schools do it. In business, obama and Geitner even made sure the principal of moral hazard was destroyed.


Obama and his type want everybody to rely on them for everything. Then they can redistribute all of the wealth the way they see fit. Which, in case you have not figured it out yet, is not geared towards rewarding the hard working people who built this country.

Jan 16, 2013 11:54AM
It is a country of deadbeats, and their chief sympathizer and apologist is the President.
Jan 16, 2013 11:52AM

 I think its time to suspend all the free money we give the indians, hell they have been reimbursed

enough dont you think?


 Need to start sending that to another oppressed group-the working white folks!!!!!!!! 

Jan 16, 2013 11:47AM
Maybe banks and financial institutions should have to pay 6% interest on their loans from the treasury and write checks to their assets(account holders) for 12% for money they use to bolster their bottom line. Instead most pay 2% above what the goverment charges and in some cases 1%. Blaming the government is wrong, rep and dems do the same thing and that is suck up to big business. Lets go back to early baby boomer years where you paid 7 to 9% for house loans that were tough to get so only those capable got homes. Apartments are not bad places to live for the most part. House values would escalate so that owning actually means something. My parents moved and sold their home 3 times from 66 to 86. Each time making more and more money up to $100k. I have had 2 homes and not once have I seen an increase in value. Depressing.
Jan 16, 2013 11:38AM

...deadbeats? My brother wrote the book. MF're has been sponging off of society from the day he got out of high school and is heading to a "retirement" of sponging off of the rest of us. NEVER in his miserable life has he applied for  a job, every job he's worked has been handed to him only to quit when ever conditions aren't "right" for him. He's nearly FIFTY and no bigger POS has ever flopped. When mom dies I have no idea what he plans then. He has NO SS income in the future and the F'er won't even get on food stamps he's so fooking lazy.


Sometimes I just want to pound his head in with a baseball bat and put him out of our misery.......

Jan 16, 2013 11:28AM

When you compare my generation to my children's generation notice;


Today if you work hard and sweat you are considered dirty not blessed to have a job.

Many large companies have yelled because they have to pay their worker a living wage while their company is making huge profits.  There is a push today to have 2 classes.  working class and wealthy class and the working class is considered stupid by the wealthy class.   No kidding the Greedy part of our society believe they deserve to be elite and their employees provisions are not their concern. 

Jan 16, 2013 11:23AM
We are definitely a nation of deadbeats.
My parents and grandparents taught me that if you can't afford something, don't buy it.
Quaint notion, eh?
Jan 16, 2013 11:22AM

America is a nation of Deadbeats.


The Rich instead of promoting new businesses right here in the U.S., creating jobs, sit back and tell us how much money they give to Charity.


The recent rate of increase in Social Security Disability by the young to avoid work is staggering. 


Why do we provide free school lunches to people on food stamps? 


Unemployment out to 99 weeks now without any demands for job retraining to collect these benefits.


Student debt for loans now tops 1 trillion dollars.  Puts the students iin a lifetime of debt and enriches the retirement beneftis of teachers.   IT IS BIG BUSINESSES


Lawyers win, no matter what side they are on they always get paid even if they lose.


Only in America------Instead of Made in America





Jan 16, 2013 11:12AM
Of COURSE we are a nation of dead beats.    We spent a TRILLION on welfare last year alone.   5% of the country pays 55% of the taxes and are told they don't pay their "fair share".    They don't, they pay DOUBLE their "fair share" while 47% of the country pays NOTHING into the pot, but gets all the benefits, including the right to vote.    If you get a welfare check, you should not get the right to vote as it is a conflict of interest as foreseen by Ben Franklin.

Meanwhile in Obamanation, the American dream is a pot of welfare checks, food stamps and disability checks at the end of every rainbow.
Jan 16, 2013 11:02AM
Forty-seven percent of us are deadbeats led by a deadbeat.
Jan 16, 2013 10:57AM
the only dead beat is odummy and all the people hes put on welfare food stamps and free cell phones and ****s
Jan 16, 2013 10:49AM
Ive got one for you!!!  Wifes ex husband never worked a job that required him to pay taxes but once and for a very short time and  worked for his moher on her ranch and lied about his income so he had to pay bare minimum on child support and spent the rest of his money on drugs! Now he is fixing to recieve ssdi benifits plus money he gets from indian crap!!! Gotta love that! 
Jan 16, 2013 10:36AM
This article and most of these comments are so wrong-headed I don't know where to begin!
Jan 16, 2013 10:30AM

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




(via Conan Obrien show 1/15)

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