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:
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I FEEL LIKE THE TIME IS COMING, ONLY THIS TIME IT'S OUR OWN GOVERNMENT!!!!!!!!!!!!!
AMERICA - - I KNOW YOU'RE NOT VERY GOOD AT IT - - - BUT LEARN FROM YOUR EXPERIENCE!!!!!!!!!
For those who understand, no explanation is needed.
For those who do not understand, no explanation is possible.
Not fair to make judgment of this, until you see what the Fire Chief says!!!!
In South Los Angeles , a 4-plex home was destroyed by a fire.
A Mexican family of six, all welfare recipients and gang members,
Lived on the first floor, they died.
An Islamic group of seven welfare cheats,
All illegally in the countryfrom Kenya , lived on the second floor,
And they, too, all perished in thefire.
6 LA, Hispanic, ****ers, & ex-cons,
Lived on the 3rd floor and they, too, died.
A lone, white couple lived on the top floor.
The couple survived the fire.
Jesse Jackson, John Burris and Al Sharpton were furious!!
They flew into LA and met with the fire chief, on camera.
They loudly demanded to know,
Why the Blacks, Black Muslims and Hispanics,
All died in the fire and why only the White couple lived?
The Fire Chief said,
"They were at work"
Less than three hours later, the President of the United States issued an executive order BLOCKING THE ENTIRE STATE OF ARIZONA 'S ACCESS to the the Federal Database that would allow such checks. The only State or Local entity EVER to be blocked.
One hour after that (which means they had it all ready in advance), the Department of Justice went live with a toll-free number, a web site, and ads, ASKING FOR PEOPLE TO REPORT BEING "RACIALLY PROFILED" because of this ruling, so they - THE U.S. JUSTICE DEPARTMENT - can file "Civil Rights" lawsuits against the Police Departments, Sheriffs, Cities, Counties and State of Arizona .
In other words, the American Citizens of the State of Arizona are going to be sued for vast sums of money, BY THEIR OWN FEDERAL GOVERNMENT, for enforcing a law that The Supreme Court UNANIMOUSLY held as constitutional.
Using the "N" word is considered "hate speech" but writing and singing songs about raping women and killing cops is considered "art".
You have to have your parents signature to go on a school field trip but not to get an abortion.
You pay your mortgage faithfully, denying yourself the newest big screen TV while your neighbor defaults on his mortgage (while buying iPhones, TV 's and new cars) and the government forgives his debt and reduces his mortgage (with your tax dollars).
Try paying bills with no job! How many Americans walked away without paying mortgages and credit cards, well figure it out buddy. If your going to tally all of it, don't leave nothing out. How about the banks and brokers that walked away with millions, and paid no dues. How about Americans that were left with homes that had lesser value, and the banks wouldn't refinance them because of it. Go ahead and spill your guts, we all know the truth. I'm not saying that all people are honest, but very many fall into this group, and you know it.
The rights of the Government come before the rights of the individual.
Being self-sufficient is considered a threat to the government.
Hard work and success are rewarded with higher taxes and government intrusion, while slothful, lazy behavior is rewarded with EBT cards, WIC checks, Medicaid, subsidized housing, and free cell phones.
Your government believes that the best way to eradicate trillions of dollars of debt is to spend trillions more of our money.
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