The exploding debt of America

[Uben]

The national debt is reaching ridiculous levels. It's getting to the point that our monetary sytem is in serious jeopardy, yet I have not heard one politician raise the issue of how we are going to pay it off. No one wants to go near the words "raising taxes", but folks, we can't keep putting everything on credit. It is irresponsible. Any idiot can sit in the whitehouse and spend money on tax cuts, health care, military build-up, and nation building, but it takes a real leader to actually do the right thing and reverse this ridiculous trend of spend, spend, spend. Right now, if every citizen paid their share of the debt, they would owe $27,463.93. That is absolutely outrageous! A family of four would owe $109,855!!! It has got to stop, and stop now! If we don't reverse this trend, we are doomed to economic collapse!


*BusinessWeek says that total household debt in the US was more than 100% of our disposable annual income last year. Now that is scary.

*The total consumer debt is at 1.7 trillion dollars. (You can visualize a trillion dollars as a stack of $1000 bills placed one on top of the other, flat side on top of flat side, reaching 67 miles high.)

*The personal credit card debt carried by the average American is $8,562 and the total interest paid in 2001 was $50 billion.... an average of $1000 in interest per consumer. The average consumer caries 8 cards and 20% of cards are maxed out.

*There were 1.3 million credit card holders declaring bankruptcy last year. Bankruptcies have exceeded 1 million per year every year for at least 7 years now.

This should be on the lips of every newscaster, politician, and american citizen, yet we don't hear one word about it. Why? Is every American oblivious to what is happening? This is not just a blight on the poor that can't pay their bills, this will affect even the billionaores! If the dollar is not worth the paper it is written on, those billions will be only be kindling for a fire to keep them warm!

It's not too late. We can reverse this trend and recover, but not talking about it and surely not acting on it will not get the job done. We should be seeing "level red" warnings right now.
It's time our politicians started doing their jobs of running the country responsibly for a change! As I said, any idiot can spend, spend, spend. It takes a real leader to do the right thing. We were on the right track before Bush screwed it all up with his vote buying tax cuts.
All that did was exacerbate the problem. He is no leader. He is a silver-spooned putz!

[Glidescube]

1. Many of those things are misleading

I'm 125,000+ dollars in debt but that include a 102,000 dollar mortgage, a 23,000 dollar car loan and ~1200 credit card debts. But the condo is now worth 300,000. the car retains it;s values because it's a toyota prius, and the credit cards will be paid off soon. So you see, debt is all relative.

oh BTW, Dad is paying for college.

[unblock]

4. but you can compare asset and wage growth vs. debt growth

and the picture is not good.

by and large, americans have gone deeper in debt -- but consumer and real estate debt -- and financed it exclusively on inflated home values as wages are stagnant.

i personally think the whole 'real estate bubble' thing is vastly overstated -- at worst i think we're in for a gradual, mild, correction, more likely prices will simply level out for the next 2-3 years -- but when debt growth is at or higher than real estate growth while wages are not growing at all, this is not a good thing.

[unblock]

2. it's kind of quaint to remember how carter got reamed over the deficit

whenever the demcrats have any semblance of power, suddendly the banana republicans and the media all make like the deficit and the debt are really, really important. carter's deficits ran as high as, mmm, around $70 billion. of course, reagan put that to shame, but reagan can't hold a candle to shrub, whose deficits are a stone's throw from half a TRILLION dollars -- and i don't trust them to be reporting even that honestly.

oh, but now that the banana republicans are in control of everything, deficits don't matter, you see....

[no_hypocrisy]

3. And this is laughable: yesterday * pushed to make his tax cuts

permanent.

[Glidescube]

6. Tax cuts for the middle class is a good thing.

I personally don't believe in income tax for the middle class and think that such taxes should be unconstitutional. If they cut taxes for the middle class and upped it for the upper class then we would see the economy rise. I'm in about the 20% tax bracket, or at least I pay that much, and If the tax was eliminated then it would be like me getting a 20 % raise. And that would be a good thing. :D

[liberalmike27]

5. I'm with you

On that score.

Besides, when you look at how good the economy gets when you start displaying fiscal soundness, as we did during Clinton's years in office, and see how fabulous the economy was, then it only makes sense to start paying off the debt, even if the tax burden is higher on the rich.

But I'll tell you where it is going. As they've been doing since the fifties this whole thing has been a shift of the tax burden further onto the poorest, and the middle class. The highest marginal federal tax rate in 1960 was 91%, and now it is 35%. At the same time, capital gains taxs were removed from income taxes, and cut to nearly nothing (15% I think). Gas, State, Utility, Sales, property, and a few others I probably have neglected to mention have increased on all the rest of us. So I see this as just a continuing movement to shift the tax burden from the rich to the lower income earners.

[Uben]

7. The thing to watch is debt to income ratio

Your debt to income ratio (DTI) is a key indicator of your true financial picture. It is definitely the lending industry's measure of fiscal health. Your debt to income ratio is calculated by dividing monthly minimum debt payments (excluding mortgage or rent, utilities, food, entertainment) by monthly gross income. For example, someone with a gross monthly income of $2,000 who is making minimum payments of $400 on debt (loans and credit cards) has a debt to income ratio of 20 percent ($400 / $2000 = .20).

Authorities seem to agree that a debt ratio (without a mortgage, utilities, etc.) of 10% or less is great. Debt ratios at 20% or higher are yellow lights as one emergency could topple the consumer big time.

[fasttense]

8. On average, US citizens have negative saving rates the lowest

savings rate since the Great Depression. Some maybe doing fine but the average American is deep in the clutches of debt. Wages have stagnated (which means a decrease in wages because of inflation) but people continue to run up credit. This not good, no matter how you look at it.

With the huge debt carried by the US, the Fed has to print more and more money to cover it. It is like diluting a bottle of whiskey, eventually all you have is water. That means the inflation reported by the government is way off.

The dollar's value is not enhanced by debt. Eventually this will catch up with the US but it wont be the media, corporations or the super rich who will pay the price.