A river of red ink
Economy Fitful, Americans Start to Pay as They Go
Excerpt:
In 1984, Americans were still saving more than one-tenth of their income, according to the government. A decade later, the rate was down by half. Now, the savings rate is slightly negative, suggesting that on average Americans spend more than their disposable income.
Though the savings rate does not account for the increased value of stock and property, or the gains on retirement accounts, many economists still view it as the most useful gauge of the degree to which Americans are making provisions for the future.
For the 34 million households who took money out of their homes over the last four years by refinancing or borrowing against their equity — roughly one-third of the nation — the savings rate was running at a negative 13 percent in the middle of 2006, according to Moody’s Economy.com. That means they were borrowing heavily against their assets to finance their day-to-day lives.
By late last year, the savings rate for this group had improved, but just to negative 7 percent and mostly because tightened standards made loans harder to get.
“For them, that game is over,” said Mark Zandi, chief economist at Economy.com. “They have been spending well beyond their incomes, and now they are seeing the limits of credit.”
Comment: View graphic Living off the housing boom
Good points in this article. I know the article was talking about consumers, but I think the same line of thinking can be applied to the country. Ron Paul has been saying this all along about our economy. We are going to start to a day of reckoning if we don't change our financial ways. The thing I've noticed about Paul is that many conservatives agree with him fiscally, but they think he's a looney nutjob on foreign policy. Whether one agrees with him or not on foreign policy, consider this: Even if you want to keep spending and spending and spending on the military because you think it's a good idea to keep expanding the American Empire, how long CAN we continue to do so? Even if one thinks Ron Paul is a nutjob, it may be hard to deny that he has a point when it comes to our billions and billions of dollars spent on foreign policy. Namely, how much longer CAN we spend this much?
ReplyDeleteGood comment.
ReplyDeleteLink to National Debt Clock. I also added a counter to the right pane of the blog.
From the US Treasury: FAQ's about the Public Debt
Want to contribute to reduce the debt? Here's the scoop:
How do you make a contribution to reduce the debt?
Make your check payable to the Bureau of the Public Debt, and in the memo section, notate that it is a Gift to reduce the Debt Held by the Public. Mail your check to:
Attn Dept G
Bureau Of the Public Debt
P. O. Box 2188
Parkersburg, WV 26106-2188
Our dollar declines in value because the Government cannot control spending. Both the Republicans and the Democrats are to blame!