[FoRK] Really scary graph of the day
gojomo at usa.net
Mon Feb 9 20:13:44 PST 2004
Russell Turpin wrote:
> Click the link:
> That puts to picture a broad impression that
> consumers, homeowners, businesses, and
> governments are all up to the gills in debt.
> It's hard to believe either that we'll stay
> at such a high level, or that the slide down
> will be easy.
To be the devil's advocate for a bit...
How much debt is too much? How do you know? It's not
the case that less debt is always better: there's some
How does this compare to other countries?
Since every dollar owed is also a dollar due for someone
else, "net debt" worldwide is always zero. Who holds all
this debt -- the same persons and organizations racking
up debt in other markets? Isn't this statistic masking out
the other side of the equation?
What is debt as a % of all assets, rather than % of
income? Is that at a centurylong high, or just middling?
Does it seem that outlandish for a person with a
$100K income to have a $300K mortgage? Aren't the person's
other assets, and the reasonably-expected aftertax
gains on the mortgaged property (and cost of the loan)
the key factors? Why then couldn't a national debt at 300%
of national income be reasonable?
Wouldn't each of the following make the use of debt
relatively more attractive...
- a stable international economic environment
- a stable political environment
- accelerating productivity
- low interest rates
- lower transaction costs
- technological innovation in financial instruments
Haven't we been seeing all of these for a decade-plus?
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