American Personal Debt, World Consumer Goods, and the G8.

[Durandal]

So, I figure I would post this little tid bit of conversation.

Fact: American's consume 40% of the world's produced goods.

Fact: American's spend beyond their mean with a National "Personal Debt" of over 19 TRILLION dollars.

Fact: National (American) Average of credit card debt is approxiamtely 22000.00 USD with close to 10% of Credit Card holders reaching an average of 77000.00 dolalrs in debt!(?).

At the last G8 Summit, there was a concern expressed by the major parties about the consumer debts of Americans. Should they actually try to real in their debt, it would have massive consequences upon the World Market, especially for places like China, who do a lion's share of the production of goods. For other nations, like for instance, Germany, Unemplyment could reach as high as 26 to 30% if American's stopped consuming at the current levels to reduce their personal debt.

Kind of scary.

Edit: This is neither a pro or anti-American thread, though I suppose all opinions are welcome, lets try to avoid needless flaming sicne this could be a hot topic...who knows.

Oh, and feel free to answer the poll regardless fo whether you are from the United States or not.

[Deuterium]

How about comparing the entire EU with the USA. That would be a fair comparison. Comparing the USA to the UK, Japan, or Germany is comparing apples with oranges. How about we look at the USA, EU, and say China? I seriously wonder why you post this if not just to sling some mud my friend.

[Fintin]

i spend nothing....gas money thats about it...i cook as much food as i can...but i dont make anything...but yeah...i hate spending money...look to the xm8 threads...

[Durandal]

Huh?

Ultimately I am criticising American spending habits. Their inability, like their givernment to spend within their means.

Until China and India get the ball rolling onhteir Middle class (and India is starting ti churn out a MASSIVE wealthy tech based younger generation with free time and developing consumer habits) no one could handle taking over the spending habits of the Untied States.

Its scary that the worlds production is based on a bunch of people spending more money than they make.

This is not a pro-America...bad Euro thread at all. Go ahead and compare the Euro-community as who whole to the U.S. and the matter changes VERY little. Nor does it change the impact it would have on Germany (which I sited as my example) since the enemployment would not be lessened simply because they are a memebr of the European community.

Japan is rather bad example as well...worse so than any individual nation in Europe...since over the past devade the U.S. has signed trade agreements that deliberately favor Japan to keep them out of a depression...because that would have been the first domino...

A world economy man, plain and simple. We are now interwoven enough that one nation can effect all, be it America or China...

I mena, imagine if the Chinese had a civil war and complete collapse. Could the world suddenly retool to take up the slack of the 40% of produced goods or would demand rise such that supply would never be met.

Scary stuff...and part of the problems when purchasing and manufacturing are not as diversified (an opinion of course shared by some economists, but certianly not all).

Don't confuse an intellecutal discussion as some sort of half-witted nationlistic rhetoric please...we have discussed between us too many times for that to happen.

Cheers my brother!

[Deuterium]

You miss my point I want to see a like comparison of population. I'll take credit over the socialistic controls over the economy that you see in most European nations any day. Who’s fooling who?

[Deuterium]

Also some of the points and figures you make are useless out of context.

What is this debt(credit) a portion of what income? What is the relationship of personal savings as compared to credit? Personally I buy and pay 95% of my bills with a credit card. I generally don't carry much cash at all either. The convenience of using a credit card over writing a check or carrying cash is the wave of the future. I generally pay off(totally) my credit card bill once or twice a year but I've been known to let it ride up to 10K every now and then. So what? What is really happening is that I'm paying a bank for the ability to pay off a debt at my convenience. As a free market if this system was unsustainable I don't think the banks would be issuing credit cards.

Most Americans also have around a 170K mortgage. But we never seem to add in secure debt?

[Durandal]

The credit card is a floating debt. Intrest paid but always there.

The numbers are a BALANCE of debt....never paid off.

Yes, the over all debt includes morgtages...repossession of homes is at an all time high...67% households own their homes...but over all equity of those homes has fallen 14% overall lower downpayments...increasing the debt via increase intrest payments. Add to this the fact that mopre and more households are taking a second morgatge on their homes to cover debt...thus further devaluing the value of the home's equity (a personal opinion because the debt still exists, it is imply trnasferred into a different form, with reisk of repossession).

If you also consider that a large majority of the credit card debt is unsecured (with the associated extremely high interest rates) then you are looking at a potential nightmare.

[Red]

The credit card is a floating debt. Intrest paid but always there.

The numbers are a BALANCE of debt....never paid off.

Yes, the over all debt includes morgtages...repossession of homes is at an all time high...67% households own their homes...but over all equity of those homes has fallen 14% overall lower downpayments...increasing the debt via increase intrest payments. Add to this the fact that mopre and more households are taking a second morgatge on their homes to cover debt...thus further devaluing the value of the home's equity (a personal opinion because the debt still exists, it is imply trnasferred into a different form, with reisk of repossession).

If you also consider that a large majority of the credit card debt is unsecured (with the associated extremely high interest rates) then you are looking at a potential nightmare.
Can i ask you a question that is off topic?what is with you and your likes obssesions over the way Americans live their lives?if i want to bury my self in debt,thats my business not yours.And like Deut said,i would rather have the credit system than the socialistic controls that are found in a lot if EU countries.

[Mr Gently Benevolent]

And like Deut said,i would rather have the credit system than the socialistic controls that are found in a lot if EU countries.
There is really little difference in the way we live and spend money here in the EU, the big thing that separates us is our health system lets face it you have welfare in the US as well.

[Red]

And like Deut said,i would rather have the credit system than the socialistic controls that are found in a lot if EU countries.
There is really little difference in the way we live and spend money here in the EU, the big thing that separates us is our health system lets face it you have welfare in the US as well.
Yes there is but not on the same scale with that done in some Euro countries

[SeanAshi]

You sound like my dad, $300,000 mortgage
$50,000 credit card debt

[Flagg]

Ahhhhhhh....a topic VERY close to my heart...here are my thoughts:


Also some of the points and figures you make are useless out of context.

What is this debt(credit) a portion of what income? What is the relationship of personal savings as compared to credit? Personally I buy and pay 95% of my bills with a credit card. I generally don't carry much cash at all either. The convenience of using a credit card over writing a check or carrying cash is the wave of the future. I generally pay off(totally) my credit card bill once or twice a year but I've been known to let it ride up to 10K every now and then. So what? What is really happening is that I'm paying a bank for the ability to pay off a debt at my convenience. As a free market if this system was unsustainable I don't think the banks would be issuing credit cards.

Deut...as usual...makes some good points(SF should consider 18F for Finance in helping 3rd world nations fix their broken economies ;) )



Yes, the over all debt includes morgtages...

Correct...your stat of $19 Trillion is VERY misleading

Only(only?!?) $2 Trillion is consumer credit(credit card, auto loan, etc EXCLUDING MORTGAGES) as of end of year 2003..that eliminates almost 90% of your "big number".

Another issue that Deut mentioned is how transactions are made....plastic(both on the internet and off) is and will continue to make huge inroads.....plus governments want to eliminate the cash economy to increase their tax take......this will have a huge impact on the figures for many reasons.


Huge figure.....and it has doubled in the last ten years...but not nearly as bad as you made it out to be....and it would be interesting to see how it would stack up in correlation with consumer net worth considering recent property appreciation.


repossession of homes is at an all time high...67% households own their homes...

Of course it has.....as home ownership has increased...so have repossessions.....there will also be a percentage of people too stupid to manage their personal finances...just like there will always be people too lasy to work..hence we'll never see ZERO unemployment.....call it personal finance natural selection.



but over all equity of those homes has fallen 14% overall lower downpayments...

WHAT? Where'd you get this one?

I owned property in the US......but living overseas I sold it about 4 years ago...big mistake...I know the current owner...he sold it for double what I sold it to him for...he's really happy(the b@stard!)...as are the majority of homeowners in the US since approx. 2000-2001....property values have soared....mucho money left equities and went into property

Unless you live next to a superfund site...you likely have seen property appreciation in the last several years that far exceeds inflation...period


increasing the debt via increase intrest payments. Add to this the fact that mopre and more households are taking a second morgatge on their homes to cover debt...thus further devaluing the value of the home's equity (a personal opinion because the debt still exists, it is imply trnasferred into a different form, with reisk of repossession).

Home refinancing has been insane in the last 3 years as the aforementioned property values have increased and interest rates have dropped dramatically........many millions have refinanced(you'd be a fool NOT to break your mortgage and refinance for a fixed rate up to 5 points lower than your previous mortgage), many have swapped their high interest credit card debt into a refi home loan.


If you also consider that a large majority of the credit card debt is unsecured (with the associated extremely high interest rates) then you are looking at a potential nightmare.

The biggest issues are those with no "stake in the game"...meaning those who don't own homes and are carrying credit card debt......those who have gained from property price rises are able to refi out of a problem.....but those without are screwed......credit overextension has screwed many in the past and will continue in the future....but your stats are very misleading.

The big issues(in my opinion) are those that have bought at the peak of property valuations, at the edge of their affordibility, with little deposit, who don't have a credit score to get the best rate, who are stupid enough to go with a variable interest rate, and get hosed when rates rise....while shopping for sh!t they don't really need.


Without getting into economic theory....to make it simple...it's good if your neighbors spend heaps on "stuff" and if you yourself save/invest as much as you can.....your neighbors can "pay" for a strong economy while you reap the benefits of savings.

At the end of the day...live on half of what you earn or as close to it as possible, BUY appreciating assets(property, equities, bonds, etc.), DON'T buy depreciating assets(expensive toys are bad,especially consumer electronics and new cars, but motorcycles are OK ;) )

Good topic idea though....just cut down on the drama.

[Red]

Ahhhhhhh....a topic VERY close to my heart...here are my thoughts:


Also some of the points and figures you make are useless out of context.

What is this debt(credit) a portion of what income? What is the relationship of personal savings as compared to credit? Personally I buy and pay 95% of my bills with a credit card. I generally don't carry much cash at all either. The convenience of using a credit card over writing a check or carrying cash is the wave of the future. I generally pay off(totally) my credit card bill once or twice a year but I've been known to let it ride up to 10K every now and then. So what? What is really happening is that I'm paying a bank for the ability to pay off a debt at my convenience. As a free market if this system was unsustainable I don't think the banks would be issuing credit cards.

Deut...as usual...makes some good points(SF should consider 18F for Finance in helping 3rd world nations fix their broken economies ;) )



Yes, the over all debt includes morgtages...

Correct...your stat of $19 Trillion is VERY misleading

Only(only?!?) $2 Trillion is consumer credit(credit card, auto loan, etc EXCLUDING MORTGAGES) as of end of year 2003..that eliminates almost 90% of your "big number".

Another issue that Deut mentioned is how transactions are made....plastic(both on the internet and off) is and will continue to make huge inroads.....plus governments want to eliminate the cash economy to increase their tax take......this will have a huge impact on the figures for many reasons.


Huge figure.....and it has doubled in the last ten years...but not nearly as bad as you made it out to be....and it would be interesting to see how it would stack up in correlation with consumer net worth considering recent property appreciation.


repossession of homes is at an all time high...67% households own their homes...

Of course it has.....as home ownership has increased...so have repossessions.....there will also be a percentage of people too stupid to manage their personal finances...just like there will always be people too lasy to work..hence we'll never see ZERO unemployment.....call it personal finance natural selection.



but over all equity of those homes has fallen 14% overall lower downpayments...

WHAT? Where'd you get this one?

I owned property in the US......but living overseas I sold it about 4 years ago...big mistake...I know the current owner...he sold it for double what I sold it to him for...he's really happy(the b@stard!)...as are the majority of homeowners in the US since approx. 2000-2001....property values have soared....mucho money left equities and went into property

Unless you live next to a superfund site...you likely have seen property appreciation in the last several years that far exceeds inflation...period


increasing the debt via increase intrest payments. Add to this the fact that mopre and more households are taking a second morgatge on their homes to cover debt...thus further devaluing the value of the home's equity (a personal opinion because the debt still exists, it is imply trnasferred into a different form, with reisk of repossession).

Home refinancing has been insane in the last 3 years as the aforementioned property values have increased and interest rates have dropped dramatically........many millions have refinanced(you'd be a fool NOT to break your mortgage and refinance for a fixed rate up to 5 points lower than your previous mortgage), many have swapped their high interest credit card debt into a refi home loan.


If you also consider that a large majority of the credit card debt is unsecured (with the associated extremely high interest rates) then you are looking at a potential nightmare.

The biggest issues are those with no "stake in the game"...meaning those who don't own homes and are carrying credit card debt......those who have gained from property price rises are able to refi out of a problem.....but those without are screwed......credit overextension has screwed many in the past and will continue in the future....but your stats are very misleading.

The big issues(in my opinion) are those that have bought at the peak of property valuations, at the edge of their affordibility, with little deposit, who don't have a credit score to get the best rate, who are stupid enough to go with a variable interest rate, and get hosed when rates rise....while shopping for sh!t they don't really need.


Without getting into economic theory....to make it simple...it's good if your neighbors spend heaps on "stuff" and if you yourself save/invest as much as you can.....your neighbors can "pay" for a strong economy while you reap the benefits of savings.

At the end of the day...live on half of what you earn or as close to it as possible, BUY appreciating assets(property, equities, bonds, etc.), DON'T buy depreciating assets(expensive toys are bad,especially consumer electronics and new cars, but motorcycles are OK ;) )

Good topic idea though....just cut down on the drama.
Damn,i currently own property that i gave out on rent,i have to say that with Interest rates as they are and summer upon us,the demand for affordable housing has surged in my area.And paying off my mortgage is much easier since i have a steady flow of income taking care of that.

[cut]

How about comparing the entire EU with the USA. That would be a fair comparison. Comparing the USA to the UK, Japan, or Germany is comparing apples with oranges. How about we look at the USA, EU, and say China? I seriously wonder why you post this if not just to sling some mud my friend.

there's no point some of the european countries have never gotten into credit cards unlike the UK or France. That is why you get large euro notes like 500 where as with pounds the biggest note is £50.

[Flagg]

There is really little difference in the way we live and spend money here in the EU, the big thing that separates us is our health system lets face it you have welfare in the US as well.

Actually....there can be HUGE differences country to country that can affect consumer spending, I'll list but a few off the top of my head:

relative tax burden
national financial system(% rate, money supply, lending parameters)
consumer protection laws
employment law
social benefit system

[Durandal]

[quote=Durandal]Can i ask you a question that is off topic?what is with you and your likes obssesions over the way Americans live their lives?

Just out of curiosity...what is my "like"?

[Red]

[quote=Durandal]Can i ask you a question that is off topic?what is with you and your likes obssesions over the way Americans live their lives?

Just out of curiosity...what is my "like"?
HELEX,ducimu19,Mustamato,ode,ariweiner.Get the picture?

[Durandal]

rofl

Not too sure how you got that impression.

[mocking_loudly_died]

Durandal a lefty extremist?

To funny.

[Mr Gently Benevolent]

HELEX,ducimu19,Mustamato,ode,ariweiner.Get the picture?
*s****** snort*
Oh f*ck Durandal has been declared an enemy of the state. :cantbeli:

[seventy6er]

I think somebody's makin a fool out of himself *turnsheadtowardRED* :lol:

[Red]

tsk tsk :oops:

[Durandal]

Durandal a lefty extremist?

To funny.

:D

God knows I certainly thought so...

Not that I am far right either. Just on a couple issues.

I am also the guy that invites the entire damn forum to my parties (not that anyone takes me up on the offer...Fourth of July is going to be huge folks...3 days of insanity...).

Cheers!

;)