Deleveraging the economy

Discussion in 'Economy' started by Wiseacre, Sep 8, 2011.

  1. Wiseacre
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    Wiseacre Retired USAF Chief Supporting Member

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    One of the possible reasons why we're in the pickle we're in economically speaking, is because we've been borrowing and spending too much over the past 30 years or so. As individuals and as a gov't, we spent a lot more than we had and now it's catching up to us. So, whatever President Obama says in his speech tonight or whatever the GOP says/does in response, it may well be that the public is just not going to return to those prolifigate spending ways. At least not until they feel better about their financial situation and their job security if they even have a job.

    According to an article in today's WSJ, household debt as a % of after tax income is around 120% (source: Federal Reserve). That's up from the mid 60s approx 30 years ago, which coincidentally is about the time Reagan cut taxes and Congress did not cut spending. Not interested in getting into a fight over who was at fault, but our national debt started to rise rapidly, and so did the household debt. Don't know if one fed the other, but as a country it's like we just gave up on fiscal responsibility.

    There is a sense among most Americans that we should not leave our debts to our children, we should be passing to them a better situation. Not sure if that sentiment is as strong as it was 40-50 years ago, but it ain't dead yet either. So it may be that for some years ahead a lot of Americans are going to rein in the spending somewhat. It is my opinion that jobs bills and stimulus spending will help assuage some of the pain people are in, but only temporarily. Until we get to the point where your equity in your house is a positive number and you feel your job is save and your brother/sister is back to work, it's all bandaids and bactine.
     
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  2. william the wie
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    william the wie Gold Member

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    Wiseacre, economics assumed its current form under speculators such as Ricardo and Keynes, as such macro-economic is great training for Wall St. not so great for running a country much less an empire.
     
  3. uscitizen
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    uscitizen Senior Member

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    Yep this is one of the major causes of where we are.
    Global competition for wages is the other major one.
     
  4. Sundial
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    Sundial Class Warrior

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    Without jobs, where will Americans obtain the money to pay their debts?

    Without sales, how will companies justify hiring more people?

    Without a jobs bill, how do you get people back to work?
     
  5. iamwhatiseem
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    iamwhatiseem Gold Member

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    You left out one very large factor - trust me on this...

    Price shopping.
    While price has long been a consideration among consumers, but nothing like the last 30 years. Retailers like WalMart, Cosco, KMart, Target etc. have driven prices down to a point where companies have no choice but to move manufacturing off-shore. The few product manufacturers left in this country are absolutely struggling...most making single digit margins.
     
  6. editec
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    editec Mr. Forgot-it-All

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    Post deindustrialization of the economy, deleveraging was bound to come.
     
  7. expat_panama
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    expat_panama Silver Member

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    This lie about American households going hopelessly into debt just won't quit. Seems it's pushed mostly by leftists that want to justify increasing government debt to sloppy voters. Let's clean up our act.

    First, the 60's were 50 years ago and Regan cut taxes in the 80's. Second, after Reagan's tax cut revenue doubled. Third, we're fortunate we live in an age that we can get the facts, because we can see debt % income has been falling for four years years now:
    [​IMG]
    Americans don't accept runaway debt, which is why they're tightening the leash on democrat spenders.
     
  8. Truthmatters
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    Truthmatters BANNED

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    remember when we tried to tell you why walmart and its cheap goods while killing massive amounts of mom and pops was BAD for this country?
     
  9. uscitizen
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    uscitizen Senior Member

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    Price shopping drove cheap imports and personal debt and pretty much stagnant wagesd after inflation was figured in helped to drive the consumer price shopping.

    It is all a multi loop vicious cycle we are locked into.
    We have not had real growth in this country for at least 2 decades.

    real sustainable growth comes from the bottom up not the top down.
     
    Last edited: Sep 9, 2011
  10. expat_panama
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    expat_panama Silver Member

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    Put a sock in it. The first Wal-mart opened in 1945. America is a lot better off now.
     

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