Americans 2.45 Trillion Dollars POORER in 3Q

Discussion in 'Economy' started by likeabird03, Dec 8, 2011.

  1. likeabird03
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    likeabird03 Active Member

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    Bloomberg: "Household Wealth in U.S. Falls for Second Straight Quarter."

    Household Wealth in U.S. Falls for Second Straight Quarter - Businessweek

    As you can see the other thread is a just a tad out of date.

     
  2. expat_panama
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    expat_panama Silver Member

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    --even while America's federal government's debt soars. What's significant here is the fact that total net worth has fallen two quarters in a row--
    [​IMG]
    --and the last time that happened we got hit with some pretty serious economic shocks.
     
  3. likeabird03
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    likeabird03 Active Member

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    I read another article about it but it was proprietary. It stated that the majority of the reduction in debt was actually due to charge-offs and not actually from the paying down of debt.
     
  4. expat_panama
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    expat_panama Silver Member

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    Hmm sounds like the liars at the Wall Street Journal but whoever it was we now live in an age where we're all free to look at the Flow of Funds--
    [​IMG]
    --and see how third quarter's private debt's now $13,766.6 billion, down $61.1 billion. Then we can look for ourselves at the total charge offs of all debt with all banks--
    [​IMG]
    --and see not only that the third quarter total was less than one seventh that number, but also how charge-offs like debt have been falling. Maybe if lying is what's needed to get econ articles published then I need to tell the WSJ about my three Nobel prizes in economics...
     
  5. likeabird03
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    likeabird03 Active Member

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    Charge-offs have come down considerably, partly because many bad debts have been purged from the system, and partly because of a lot of moratorium on foreclosures in the past year or so, this means that there's still a huge shadow inventory of homes that aren't showing up in the numbers.

    That being said the rate of charge-offs spikes very very high between 2008 and 2010 according to that graph, so it does account for why the amount of outstanding debt fell during this time somewhat, and why the rate of decline in debt has slowed in the past few quarters.

    Either way I don't think we're talking about an earth-shattering phenomenon here, debt is still above even it's 2006 levels. It's also important to note that the size of each mortgage being originated now compared to the mid 2000's is far lower due to the decline in home prices, and that also has an effect on the amount of consumer debt outstanding.
     
  6. expat_panama
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    expat_panama Silver Member

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    Reducing debt can be bad if we drop assets more. Right now we've got a trillion dollars less debt than we did in the beginning of '08 when we had seven trillion dollars more in assets. We paid off a trillion in debt and we're six trillion poorer. Not good.
     
  7. likeabird03
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    likeabird03 Active Member

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    That's because asset prices fell far more than debt levels, such as home prices and stock prices. I would agree that in this economy a drop in debt is probably a sign of something problematic going on however.
     
  8. expat_panama
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    expat_panama Silver Member

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    Agreed. Debt = lending = investing and it's all been winding down with the shrinking economy.
     
  9. waltky
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    waltky Wise ol' monkey Supporting Member

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    Granny say purt soon dem Asiatics gonna own us lock, stock anna Statue o' Liberty...
    :eek:
    Japanese Holdings of U.S. Government Debt Top $1T for First Time
    January 20, 2012 - Japanese holdings of U.S. government debt have topped $1 trillion dollars for the first time, according to data released this week by the U.S. Treasury Department.
     

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