(Newsweek) Spend Cycle: America Deep in Debt

[brooklynite]

Aug. 9, 2006 - For the first time ever recorded, Americans owe more money than they make. Household debt levels have now surpassed household income by more than eight percent, reaching 108.4 percent in 2005, according to a May 2006 study by the Center for American Progress. Consumer debt is now at a record $2.17 trillion, reports the Federal Reserve Board and consumers cashed out a whopping $431 billion in home equity last year.

Christian E. Weller, the author of a recent Center for American Progress (CAP) report, 'Drowning in Debt,' says the middle class, specifically, is struggling. Wages have been stagnant and they're losing the battle to keep up with the cost of living. "The data shows that people are borrowing more money not because of over-consumption, but because they're caught in a bind," says Weller, a senior economist at the CAP. "In that bind, the only escape valve for middle class families is to borrow more money." NEWSWEEK's Jessica Bennett spoke with Weller about the scope of America's debt, why it's so hard to get out from under, and how it will affect the economy in the future.

NEWSWEEK: How big has America's debt problem become?

Christian Weller: The scope of the problem is large and it's growing. We now have the highest level of debt relative to income on record since the 1950s . We also have the highest debt payments relative to income since the 1980s ... We're in a unique world that we've never seen before, what's surprising is that we've reached these levels in a time of historically low interest rates. So from that perspective, you know that going forward can only go up.

http://www.msnbc.msn.com/id/14251360/

Well, good thing the Congress voted to crack down on bankruptcy option so these folks can't wriggle out from under their obligations to the Bank and Credit Card industry...

[I_Make_Mistakes]

1. That's what they wanted, to brake our backs! Now, let them

deal with the fallout. I fear things are going to get really nasty real soon in this country!

[AX10]

2. And it is this that is holding the economy up.

Americans cannot mortgage their futures forever. The bills will come due soon and the walls will come crashing down.