U.S. debt load falling at fastest pace since 1950s

[Zorro]

Everyone knows America has too much debt. What they don’t know is that things are getting better, not worse.

Little by little, our economy is reducing its debt burden, slowly repairing the damage caused by 10, 20 or 30 years of excess.

If you want to know why economic growth has been so tepid, here’s your answer. Four years after the storm hit, the economy is still deleveraging. And it’s very hard for any economy to grow when everyone is focused on increasing their savings.

Total domestic — public and private — debt as a share of the economy has declined for 12 quarters in a row after surging over the previous decade.

More at: http://finance.yahoo.com/news/u-debt-load-falling-fastest-040045522.html

[SidDithers]

1. DU rec...nt

Sid

[YellowRubberDuckie]

2. Oh, if we could be debt free and off the grid except for an internet connection...

...I'd be so happy! I am so tired of giving these people money every month!

[bemildred]

3. Econo-babble, mumbo-jumbo. nt

[pansypoo53219]

4. IMAGINE

if the bush tax cuts were killed in 2010.

[myrna minx]

5. This is exactly what I'm doing. I'll be completely debt free in the autumn.

When I'm debt free, I'll be rebuilding my emergency fund. I never want to be under the boot of debt again. It's been a long and challenging process, but I've learned so much along the way.

[econoclast]

6. Americans NOT increasing savings

From June 1st Marketwatch...


WASHINGTON (MarketWatch) — The savings rate for U.S. households slipped in April to match its lowest level in four years as spending grew faster than incomes, the Commerce Department estimated Friday.
The personal savings rate declined to 3.4% in April from 3.5% in March.
The April level matches the February level, which prior to that month was the lowest since December 2007.
Consumers had built up savings and paid off high debt levels in the aftermath of the financial crisis and the recession. The savings rate hit a high of 5.6% as recently as the third quarter of 2010.
The low savings rate raises doubts that consumers can sustain spending at what’s been a relatively fast recent clip.
Consumer spending increased at a 2.7% rate in the first quarter, accounting for all of the 1.9% annual growth rate. This was the strongest gain in consumer spending since the fourth quarter of 2010.


As a reference point, American savings rate as recently as the 1980s was about 8% to 10%

[laundry_queen]

7. Leveraging is the dumbest policy out there.

Sure it works - when the economy is good. But it's like the little girl with the curl. When it's bad, is horrid. There should be controls around leveraging IMO. It was a huge part of the problem with the 08 crash - and I do believe I heard some good DUers sound the warning bell about this in '07 but I didn't understand it. After a bunch of accounting, corporate finance and economics courses, I realize everyone who knew anything about the financial system should've seen this coming a mile away but everyone was just too greedy...they wanted to leverage every last little bit to squeeze every fucking penny of profit out of the firm and didn't give a shit if the economy tanked because they knew they'd get bailed (or they knew if the firm went under, at least management and owners walked away with enough money to live comfortably forever).

And now because all the firms that did survive are hoarding money (That's what they mean by 'increasing their savings') but because the banks are part of that this time as well, they are hoarding money too and thus unlike most recessions, the supply is still low for lending to small business. Couple that with the GOP blocking real government spending and you have no real recovery. If small business can't start up, and large firms are saving (thus not hiring) and the GOP blocks the government at every turn, employment will take years and years to recover.

The article is SO right that it was private debt - not public debt - that created this mess. If the GOP wants government to run like a business, then I suppose they should let government leverage as well to get the most they can out of their spending. But, no, they want government to live by a narrow set of rules - gov't can't run a deficit or have debt or supply social benefit programs, but it's okay if private firms leverage until they burst, then crash and have to be bailed out by...the gov't. Another case of the GOP wanting it both ways. They're okay with socialism - so long as it means socializing private losses, but not okay with socialism when it comes to private profit. Hypocrites and idiots, the lot of them.

And yet, the government is acting exactly the same as private firms at the moment - it's saving and deleveraging as well. So the next time some ignoramus tells you how the government needs to act like private firms, tell them they already do and tell them about leveraging and saving in boom and bust cycles.

And as much as they shout about Keynes theory being dead, it makes them sound even dumber. Canada basically follows Keynesian policies and guess who weathered the storm better than most countries? The only reason we went into recession is because we are so closely tied to the US. And look at all the Monetarists out there...guess what, interest rates can't get much lower. You've used up all your power. If things went to shit right now, you have NO options other than gov't spending a la Keynes. And guess what else? that's what you should've done from the beginning.

If Rmoney gets in and puts austerity measures in place, mark my words the US will no longer be a world power. It will never be able to recover from that supply side crapola.