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The front page of the Wall Street Journal published this article last Friday. (First two paragraphs below). Either the Journal wants to encourage people to go out and spend money they don’t have, or they have it totally wrong. How can any family be ready to start spending after defaulting on their loans and scrimping on expenses? When debt goes from 130% to 116%, is like being under water, and going from 3 feet of water over your head to 1 1/2 feet. Conclusion: one can’t still breathe.
I live in CT, and just last week I was talking to people who make well above average salaries. All they talked about was having trouble paying $3.85 for a gallon of gasoline to commute to work, and brown bagging lunch to save money. I am interested in what others are hearing from relatives or friends in the US. Thank you,[i]U.S. families—by defaulting on their loans and scrimping on expenses—shouldered a smaller debt burden in 2010 than at any point in the previous six years, putting them in position to start spending more.
Total U.S. household debt, including mortgages and credit cards, fell for the second straight year in 2010 to $13.4 trillion, the Federal Reserve reported Thursday. That came to 116% of disposable income, down from a peak debt burden of 130% in 2007, and the lowest level since the fourth quarter of 2004.[/i]
http://online.wsj.com/article/SB10001424052748704823004576192602754071800.html?KEYWORDS=debtI wonder what they would be saying if they had to pay over $8 a gallon as they do in Europe…
The Wall Street Journal is one of the many mouth pieces of a small group of extremely powerful people who are in the process of destroying what’s left of the middle class in the US and, although they are personally responsible for “a horrific financial crisis caused by massive fraud not a single financial executive has gone to jail and that’s wrong!” Charles Ferguson.
You saw Charles Ferguson’s documentary movie the ‘Inside Job’?
There was an an interesting Forbes article last year comparing the US debt levels to those in China…
“At face value, the similarities between China and the United States, with respect to relative levels of assets to income, as well as demographics, are remarkable. The level of debt to average income, however, is not. The average US household debt is 136% of household income, compared to 17% for the Chinese. Moreover, if we include federal borrowing, the United States number increases an additional $109,792 per household, to $224,303 per household or 266% of average household income.
We need to ask the question, Is this sustainable? And where is all of this debt coming from?”
The articles some other very useful information …
And some very smart people in the USA believe the ‘real’ level of unemployment in the USA is probably around 22%.
I hear some people say that the US has been through tough times before and pulled through but it’s never seen anything remotely like this before and it’s sad to say but, I don’t believe that the US is ever going to return to it’s former glory, the British ‘Empire’ had it’s day and so has the USA.
I agree Scott, our (USA) glory days are gone and the middle class, well when I look at housing prices by me, don’t know how they do it. I decided not to purchase a home here in NYC/NJ. That said there certainly plenty of people in NYC buying what most would consider very expensive real estate.
I am in the process of buying a small home in West Palm Beach, Fl. and will run my NYC based business from there. Even if my income halves (don’t expect it will) I will still enjoy a much better life and weather. Total housing costs will be about $700 per month, that includes insurance and taxes. Taxes alone on a home we almost bought here would have been about $12,000 per year!! My current heating bill alone is $350 per month. I would love to be in CR, but just can’t make that happen quite yet. But hey, now I’ll be only 2.5 hours away!
We are just hunkering down and living in the moment, I hope for the best though, we’ll all just have to wait and see.
In a former incarnation I was the singer for a punk rock band and wrote a line “I don’t know what the future holds; but it’s grim from what I’ve been told”. Thought you might get a kick out of that…lol.
markus, you quoted the WSJ as follows:
[i]U.S. families—by defaulting on their loans and scrimping on expenses—shouldered a smaller debt burden in 2010 than at any point in the previous six years, putting them in position to start spending more.
Total U.S. household debt, including mortgages and credit cards, fell for the second straight year in 2010 to $13.4 trillion, the Federal Reserve reported Thursday. That came to 116% of disposable income, down from a peak debt burden of 130% in 2007, and the lowest level since the fourth quarter of 2004.[/i]
Taken in the aggregate, it doesn’t surprise me that “Total U.S. household debt . . fell . . .”. If a family has already defaulted on what is likely the largest debt in their lives, the mortgage, and thereby rid themselves of that debt, why wouldn’t their debt load be reduced?
The question that remains is, “So what?” What insight can we glean from the fact that many, many families no longer have mortgages? I mean, it’s not like they paid them off.
The real number of interest would be the net total aggregated wealth of households. Show me a financial statement for American housholds and we’ll have something significant to discuss.
I don’t read the corporate media. They have an agenda and can’t be trusted. Things are bad here. Sometimes I think the only people who know this are the ones who have been laid off and or lost their homes. For the rest, they are asleep while the banksters and government rob them blind
Thanks to all of you for the responses.
Scott. Thanks for response and many statistics, which are pretty accurate and accepted even by the main media. I haven’t watched “Inside Job” yet. I will watch it soon.David. I agree with you. That was the whole point. People around here in Fairfield County (suppossedly one of the richest in the country) don’t feel like going out to spend money, restaurants are half empty on Friday nights, the mall half empty, real estate pages still 2 pages long, it used to be 10-15 pages long, etc.
Lotus. I agree. It is nearly impossible for many people to make ends meet around here.
Sprite. Agree. But, even the corporate media lets tidbits of good information every once in a while.I hope the public is paying attention.
[quote=”markus”] [i]U.S. families—by defaulting on their loans and scrimping on expenses—shouldered a smaller debt burden in 2010 than at any point in the previous six years, putting them in position to start spending more.
Total U.S. household debt, including mortgages and credit cards, fell for the second straight year in 2010 to $13.4 trillion[/quote]
That’s only $167,500 debt for a family of four and only a touch more than three years wages for the average American middle class worker. What are you waiting for? 😆
That article had to be written by some idiot in the credit card industry. The greedy financial institutions are reaping huge rewards off of personal debt and are out to break the middlee class. 🙄
Best advice is to pull in your horns, live as cheaply as possible and pay down debt as quickly as you can. Crying over gasoline prices is a non-starter. It’s not as convenient but cheaper to use the bus system that to drive.
If you already have a credit card balance, why bother paying it off to banks? The money used to pay your credit card charges was pulled out of thin air by the banks anyway. They never had it in their possession until your signature gave them permission to conjure it up.
If you decide to stiff the banks, you will have no more credit to worry about anyway. Pay cash for everything or use a debit card… and forgo credit. The way I see it, you may as well grab some of your hard earned money back from the banks who are running this big ponzi scheme. Anyone who feels a moral obligation to pay back a bank simply does not yet understand what has been, and still is, happening.
Keep a checking account, if you like, to cover any monthly contractual obligations. But buy a good safe and bolt it to your floor and keep enough cash and silver there for daily and weekly expenses and to get you through a run on banks. Hyperinflation is going to happen.
I almost did that Sprite, I had gotten myself in some heavy debt through bad timing and some health issues. Long story short, my biz picked up in a big way and I payed it all off in about a year and a half, not out of a moral obligation, but to protect my credit rating. Sure if we get the catastrophic melt down you expect who cares? But I don’t agree with that scenario (completely) and as you know everything is based on your credit rating in this country.
Until that blip I always ran zero debt and it feels good to be debt free again with my 795 credit score intact. But if my biz would not have picked up, I would have had no issue at all walking on that debt, I would not have slaved for years and years to pay it off.
I have a friend in Florida who paid $240k for a condo that is worth $75k now. He felt morally obligated to pay the note off, then after a discussion with a friend with views more in-line with Sprites was ready to walk. But after a meeting with a lawyer he was told that he could be liable for the debt for up to 20 years? Personally I would take the risk, he wont. What do you know about this?
My position on this matter is one of a person who considers it a moral responsibility to resist these financial terrorists. But each of us have to decide what is best for us.
If you commit to not using credit as a way of combating these scumbag blood suckers, then, as a practical matter, it does not matter what your credit score is. You will have joined the resistance and while there are consequences for taking a stand, not taking a stand also has consequences.
Remember, the money currently in use is a fiat currency. It is conjured out of thin air and is a tool to rob you and me and everyone else of our labor and property. Participation in this ponzi scheme is nearly unavoidable unless you can go completely off the grid. That is a hard way to go. But at the very least we can avoid complete immersion in this scheme by avoiding using credit….and take the banks for whatever we can.
[quote=”*Lotus”] Sure if we get the catastrophic melt down you expect who cares? But I don’t agree with that scenario (completely) and as you know everything is based on your credit rating in this country. [/quote]
Lotus, I am curious as to how you see the world economy playing out over the next several years and why. Obviously you see a less dramatic resolution. My conclusions are only guesses and repeated conclusions of others based on what I read. While my source data may be accurate, the conclusions based on that data may be wrong. But I can list the reasons why I and others strongly suspect a horrific, systemic failure in a near future. What is the main thing you see as saving us from that dire end?
As much as I can’t stand the big banks I have to have my mortgage with one of them. In 12 years I have never been late on my payment. Now I see deadbeats walking away from their responsibilities and screwing things up for us honest people and we that still have integrity. Ultimately we are all responsible for our decisions whether it be taking out a mortgage or applying for a credit card. The banks may have been shady in their marketing techniques but individuals still bear the responsibility of their actions. Unfortunately, too many scumbags that can afford to pay are deciding not to pay and choosing to simply walk away. They think they’re just screwing the banks but they’re also screwing the honest payers. People like that are weak and spineless and derserve their misery. So yes…. The big banks are ‘F’d’ up but so are a lot of individuals who chooses to walk away from their obligations. Nobody put a gun to their head. They made bad decisions and are looking for a scapegoat to blame someone else.
It sounds to me like you may be directing some anger and frustration in the wrong direction.
Things have already been screwed up for us. The damage done to the economy by the little guy walking away from a mortgage is practically nothing compared to the damage done and being done by the banksters. The little guy who walks away from a mortgage is merely responding logically, legally and morally to a fraudulent loan contract with a greedy bank.
The banksters knew exactly what they were doing. The little guy did not. Do you know of any case where someone took out a mortgage before 2008 with knowledge that the market was going to crash so that he could later default? More to the point, is your main motivation in staying in a disadvantageous mortgage being done as a personal sacrifice to help the economy?
If you truly understood how this game has been set up and to what end it is being played, you would change your opinion about the tactic known as strategic mortgage default AND you might not be so eager to gift any more of your hard earned money to the very banks that have brought the world to its knees.
http://money.blogs.time.com/2010/01/11/strategic-mortgage-default-the-irresponsible-amoral-but-best-strategy/Bogino. I agree with personal responsibility. I also believe banks and corporations should be held responsible for their actions, hence, corporate responsibility. Banks and corporations must be held at much higher standards than consumers. Because, banks and corporations are much more sophisticated and have many more resources and armies or experts, attorneys, lobbyists, etc.
Are there any statistics on how many deadbeats are walking away from their mortgages compared to how many honest hard working people, who the banks irresponsibly gave them a mortgage they could not afford?
I read in FL over 40% of homeowners owe more than what their house is worth. Is it possible that almost half the FL residents are deadbeats?
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