Posted On: Monday - February 6th 2017 8:44AM MST
In Topics: Global Financial Stupidity
(Continued from here.)
Part 6 was just updated to indicate that THIS ONE (Part 7) is to be about consumer debt and Part 8 about the problems around the rest of the world.
Of course, there isn't enough room in one post to go over the details of any of this, but these "primers" are just that, an introduction to the problem. While discussing the ways that different obligations, sometimes in the form of paper debt "instruments", and other times just promises on a contract or in pension plan brochure, are interrelated, in Part 6, a big item was skipped. That is consumer debt.
Americans, on average, have quite a lot of debt on their own, not related to any of the stuff big government is up to. One could say that their governments are just going to do what Americans let them, but I believe that, especially our Feral Gov't, they are out of our control now anyway. It is probably the case that Americans don't have enough worry about the consequences of governments having sky-high debt and obligations due to the fact that it's just a part of everyday life for most families also in this day and age.
The biggies are mortgage debt and other loans against people's biggest asset, their homes, credit-card debt, college loans, and auto loans. If you went back to the early, and even mid 1970's, you would find that only the first of these 4 was any kind of significant number. Yes, you'd have to go back quite far to get to the time when people bought houses without payments, but the money wasn't lent out so readily, before the US Gov't got it's dirty hands in this business.
Car loans have been around 2nd longest, but 4-year payment plans were the highest you'd get until just a few decades back. Now, people are getting as long as 7-year terms for pay-back! (It sounds worse in months - only an 84 month plan! - the coupon book - do they still have those? - would be a half-inch thick - kinda depressing.) This business, as of late, the last 5 years, has become the new sub-prime business, as they'll come up with any plan that has payments small enough for the buyer to squeak by on. It keeps the cars moving off the lots, and the repo business has gotten a lot safer lately, with the new technology to, say, disable the vehicle in the parking lot while the repo man knows the
Credit cards have been around for 50 years or more, but they weren't something that average Americans depended on regularly for their financial dealings that far back. I can remember getting one just to take care of buying items over the phone, but really only for that reason (I'm very glad to have grown up in a conservative family). Debit cards took care of the problem of buying things remotely, so that's not the reason most people have credit cards now. People want to spend to the max and feel they are doing OK if all the paychecks in the family cover the payments.
Lastly, the student loan debt is orders of magnitude greater (even in real dollars) than 3 decades ago. PeakStupidity featured a short post about this already, but there is much to say about this, and we have a particularly lot of experience in the University environment.
Again, this is just intro. and not very entertaining even as I read over it myself, but the detail posts will be more interesting, I promise. The large point here is that the numbers are very HIGH compared to the recent past, even in real dollar terms, of all this consumer debt. At the same time, the number of jobs that could enable a large portion of American society to live a middle class lifestyle and keep covering it's debt is much LOWER and decreasing.
As mentioned in my examples of the interrelationship of money/debt over the economy, this consumer debt, much of which is totally unpayable, is held as assets by what-have-you, other people's pension plans, your 401K account, etc. There's no tightening up on one part of this mess without causing pain everywhere else.
Next up, and the last of the "primers", will be a short discussion about the state of the world compared to America's debt problems.
Comments:
Moderator
Tuesday - February 7th 2017 1:57PM MST
Mr. Putin, do you maintain then (based on your last paragraph) that the Commies of old were not only more honest but also were in it to do good (as they saw it)?
I can see the 2nd part, as now I think these Culti-Marx types don't even really want to help the society they live in - they seem to just want to destroy.
As for the 1st part (of MY question to you), I am not sure if they were smarter people back in the day - hell, on average I guess people were smarter back then.
What do you think, Boris?
I can see the 2nd part, as now I think these Culti-Marx types don't even really want to help the society they live in - they seem to just want to destroy.
As for the 1st part (of MY question to you), I am not sure if they were smarter people back in the day - hell, on average I guess people were smarter back then.
What do you think, Boris?
borisputin
Monday - February 6th 2017 6:27PM MST
I don't have a link for you, but I was reading someone's (very long) 3 part response to Ta'Nisi Coates' (that right?) call for Reparations.
In the part about Redlining he discussed the history of the term and where and when it was practiced. New Deal programs were totally on board with it practically. At the beginning the probability of the loan being repaid successfully was of prime importance in the program.
Like so many other things this changed in the 60's. But for about 30 years, despite the people extended loans to, they were as prudent as any other group of green eyeshade men.
People used to think so differently, even the liberal ones in the old days. I really think if you had a time machine you could bring one of the old card carrying Communist Pary members from the US forward in time, and they would go "WTF" if confronted with the reality of how it all turned out.
In the part about Redlining he discussed the history of the term and where and when it was practiced. New Deal programs were totally on board with it practically. At the beginning the probability of the loan being repaid successfully was of prime importance in the program.
Like so many other things this changed in the 60's. But for about 30 years, despite the people extended loans to, they were as prudent as any other group of green eyeshade men.
People used to think so differently, even the liberal ones in the old days. I really think if you had a time machine you could bring one of the old card carrying Communist Pary members from the US forward in time, and they would go "WTF" if confronted with the reality of how it all turned out.
After all they had the big book of Marx and everyone they knew believed the same things right? Everyone behaves like Swedes or something when inserted into a welfare state.
Dmitri Orlov wrote some anecdotes contrasting Russia (pre Gorbachev) and America where he immigrated. His theory was that Americans would have made much better communists because Russians were too unruly. Just a bad fit for them from the word go. They couldn't even manage to get into line properly to go to the bathroom or something, let alone make some society work which basically needed a population of altruists.
He had some funny stories about flying back to Russia to visit sometime around 2000, and a couple incidents on the airplane with heavily intoxicated Russians making a scene.
For what it's worth I also don't believe conservatives or libertarians understand exactly where we are now thanks to the way technology has progressed. Quite literally a substantial portion of the population is no longer capable of earning enough from what... call it the market is willing to pay for their labor, without subsidies.
If they find work at all, without the various ways government employs or makes employment for them.
As long as I am long winded tonight, Sailer has a post about some article he found where 92% of left wing activists (whatever the definition is) live with their parents.
See this is something the Unz types don't understand either.
I read an essay Arthur Koestler wrote about Germany in the 30's (German Jew, playwright, was married to Marilyn Monroe at one point, involved with the Communist Party in Germany, smart enough to bug out early). One of the things he pointed out was that the Communist Party and the Nazis both recruited the same kind of young men. From what I gathered it was more a matter of who they knew, or where they happened to be as to what they became affiliated with.
Basically they had a generation of youths that were young, dumb, and ready for something to happen. Things could have broken differently, but whatever happened EMO was the weather prediction.
Interestingly he thought that the Russians sabotaged the German Communists efforts to win the 32 election. He was convinced they could have won that.
Of course it might be like that thing where Vietnam Vets are all convinced "They could have won that," whether they turned into hippies when they got back home, or a silent majority type.
Eric Hoffer had a pretty good, very short book about the whole thing, "The True Believer."
Here's someone's review from Amazon (I don't really remember too much personally about it, other than some general stuff):
"How about this for insight and concision? "Mass movements can rise and spread without belief in a God, but never without belief in a devil."
Over the years I've read quotes and excerpts from this book and seen interviews with Eric Hoffer. I can't remember ever hearing a more straightforward-speaking character. He seems to discard all assumptions and plunge to the heart of the issue. Maybe that's why Jimmy Carter appointed him one of half a dozen or so people to figure out why the country was suffering from "general malaise" in the mid 1970s.
Finally reading it now, I find it to be a web of interconnected generalizations about the necessary conditions for generating a true believer. It sparkles with an occasional statement that's more than usually penetrating, but I found myself getting lost sometimes in theoretical constructs like "the loss of individuality" in the absence of empirical bonding. I kept wondering how the hell you measure something like the loss of individuality. And sometimes the logic of the book seems to be "frustration (under exactly the right set of circumstances) leads to radicalism" or something of the sort.
It's pretty thought provoking if you haven't had your thoughts provoked lately about problems like true believers blowing themselves up in the middle of a souk or something. It belongs in the category of such theoretical works as Emile Durkheim's "Suicide" or William James' "Psychology: A Briefer Course."
It takes a certain amount of stamina to get through it, especially in the absence of anyone to discuss it with or to hear it explained. I find that I'm a little too old for such effort now and never quite finished the book. I couldn't finish "War and Peace" either. The author isn't to blame. His prose is lucid and still relevant. I'll give just one example.
..."