Its about debt - all about debt (or should be)

[salin]

National debt- annual interest costs on the debt shrinking the ability of our tax dollars to actually pay for government... not to mention the problems tied up with who is purchasing all of our debt bonds (to pay for our daily deficit spending).

Personal debt - already rising in this era - but likely to further increase as rates of inflation outstrip wage increases (but we still want to buy buy buy!) Folks worried about a housing bubble, imo, are missing a bigger looming problem. When a mass can no longer make mortgage payments... a rush of foreclosures - devalued properties - and banks holding unliquidated devalued assets...

Financial institution debt - back in 2002 it was made clear that many banks were making risky huge loans to mega corps with very funky structures - and that many banks (think JPMorgan Chase) were carrying higher debt loads than in previous years...

How long can it last?

What are the potential problems?

What are any solutions?

Have to log off until the evening - but would be very interested in other thoughts on the topic. I fear there is a financial debt tipping point, but I don't know where it is, or if we are approaching it - but I do believe that the earthquake and tremors could be very painful.

[wakeme2008]

1. The housing bubble will be one of the biggest problems joe sixpack

faces.

A lot of people are carrying ARM mortgages and as the interest rate goes up so will the mortgage. Once they start to try to sell these white elephants there will be major problems...

[brokensymmetry]

2. It's partly about debt.

Partly about the trend of the debt. We as a nation, and as individuals, are consuming more than we produce. This means we enjoy a pleasant lifestyle - but we are robbing the future.

At some point, something - oil prices, more war, an economic cycle - will cause disruption. Then we'll have a lot of people destroyed financially. Things become even more interesting when we look at the effort to destroy social security, the devastation of private pensions, and the dearth of savings. We will have a large number of destitute elderly. We'll also have people who are unable to escape their debts through bankruptcy due to the new legislation.

I believe this suggests that we are about to see the destruction of the U.S. middle class, and the establishment of a permanent underclass of desperately poor people who will work until death's merciful release.

How long can it last? No one can say for sure, but I think not long. Is there a solution? Sure. Produce more than we consume for the next 30 years. But just as it is unlikely for a 300 pound couch potato to become a lean athlete, so too is it improbable that we will voluntarily change the path we are on.