Posts Tagged ‘debt’
I probably shouldn’t, but…
July 27th, 2011 | 
Author: I don’t do politics here much anymore, and almost never do mortgage stuff, but today, I can’t resist. So you’ve been warned.
- The ceiling is going to be raised. It is almost certainly going to be raised by the August 2 deadline.
- There will be budget cuts. They will almost entirely be illusions, projected for years in advance, so that the “$2.2 billion” in “cuts” will be backloaded for future Congresses to deal with, and they will not be actual cuts, only smaller increases in funding.
- There will be tax increases. Real ones, starting right now. On you, and me, and especially “millionaires”, which is defined as those making $250,000 or more per year. Not indexed to inflation.
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Wasn’t I Just Saying That?
A couple weeks ago I posted about debt and spending in A Conundrum Wrapped in a Paradox, Stuffed in a Burrito. The point was that we as a country can get – and have gotten – to a place where we can’t keep spending as we have, because we weren’t spending our money, and now the debt service is so high that we can’t pay it all back unless we start economizing.
Today, here’s this from the San Francisco Fed:
In the long-run, however, consumption cannot grow faster than income because there is an upper limit to how much debt households can service, based on their incomes. For many U.S. households, current debt levels appear too high, as evidenced by the sharp rise in delinquencies and foreclosures in recent years. To achieve a sustainable level of debt relative to income, households may need to undergo a prolonged period of deleveraging, whereby debt is reduced and saving is increased.
Bingo.