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Thread: U.S. debt load falling at fastest pace since 1950s

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    U.S. debt load falling at fastest pace since 1950s

    [url]http://finance.yahoo.com/news/u-debt-load-falling-fastest-040045522.html[/url]


    WASHINGTON (MarketWatch) — Everyone knows America has too much debt. What they don’t know is that things are getting better, not worse.
    Little by little, our economy is reducing its debt burden, slowly repairing the damage caused by 10, 20 or 30 years of excess.
    If you want to know why economic growth has been so tepid, here’s your answer. Four years after the storm hit, the economy is still deleveraging. And it’s very hard for any economy to grow when everyone is focused on increasing their savings.
    Total domestic — public and private — debt as a share of the economy has declined for 12 quarters in a row after surging over the previous decade.
    The rapid rise in federal debt over the past four years has distracted us from the big picture. The level of public debt is indeed worrisome, but it’s not as big a worry as the economy’s total level of debt — public and private.
    Although we have a whole cottage industry devoted to warning us about the dangers of too much public debt, we don’t have any comparable Cassandras telling us about the dangers of too much private debt. Yet the history of the past 30 years (or 300) clearly shows that too much debt, of whatever variety, can pose a systemic risk to the national and global economies.
    As much as we hear politicians, pundits, tea-party patriots and the Congressional Budget Office obsessing about government debt, it was excessive private debt — not public debt — that caused the 2008 financial meltdown. And it was private debt — some of it since transferred to the public — that lies behind the current European debt crisis. (Greece is unique in having a public sector that ran up spending while its private sector is rather conservative.)
    As the political rhetoric about the federal deficit has heated up, we’ve lost sight of the progress that’s been made in bringing total debt back under control. The U.S. is actually doing much better than you’d think if you just listened to the conventional fears about how we’re rushing headlong into a debt Armageddon.
    In fact, since the recession ended in June 2009, total U.S. debt has risen at the slowest pace since they began keeping records in the early 1950s. While Washington has taken on a lot of debt since then, the private sector has paid off, written off or dumped on the government almost as much.
    As a share of the economy, debt has plunged as a consequence of rapid deleveraging by families, banks, nonfinancial businesses, and state and local governments. The ratio of total debt to gross domestic product has fallen from 3.73 times GDP to 3.36 times.
    In the 11 quarters since the recession officially ended, total domestic debt has risen by just $702 billion, or 1.4%. By contrast, in the 11 quarters before the recession began, in those bubble years of 2005, 2006 and 2007, total debt increased by $10.7 trillion, or 28%.
    And it wasn’t just the U.S., other advanced economies were adding on to their debt loads as well, with most of the debt taken out by the private sector.
    Debt was growing at an unsustainable pace, but it was fueling the U.S. and global economies.
    Economists who have studied the impact of indebtedness have found that low levels of debt are essential to growth, but that high levels of total outstanding debt can hurt an economy. Beyond a tipping point, adding on more debt will reduce growth over the long run, even if it inflates a bubble in the short run.
    “At low levels, debt is good. It is a source of economic growth and stability,” concluded Stephen Cecchetti, M.S. Mohanty and Fabrizio Zampolli, economists for the Bank of International Settlements, in a paper presented at the Federal Reserve’s Jackson Hole conference last August. “Beyond a certain point, debt becomes dangerous and excessive,” and can lead to increased volatility, financial fragility and slower growth. It can even bring down the real economy with it, as we have seen. Read the BIS paper, “The Real Effects of Debt.”
    Cecchetti and his co-authors found that growth can be impaired once nonfinancial corporate debt hits about 90% of GDP, or when household debts hit 85% of GDP, or when public debts hit about 85%.
    In the U.S., household debt has now fallen to 84% of GDP from a peak of 98%. Nonfinancial corporate debt has fallen to 77% from a peak of 83%. Financial sector debt has plunged from 123% of GDP to 89%. Public debt has risen to 89% from 56%.
    The deleveraging process in the private sector still has a ways to run, not based on some economists’ rule of thumb, but based on what real people are actually doing. Banks and households are still slashing their debt, while nonfinancial companies are beginning to borrow again, but only a little, according to the latest data from the Federal Reserve’s flow of funds report. Take a look at the flow of funds.
    According to a study by McKinsey published earlier this year, U.S. households may have two more years of deleveraging left before their debts are sustainable again.
    If McKinsey is right, the U.S. economy may have to endure a couple more years of slow growth.



    again it is not obamas fault why the country was so bad he just happened to take it over when the other presidents luancy was coming to fruition..........Now he has been trying to put the country back together but needs more than 4 years.

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    we have more people without any money or jobs, hence no mortgage or credit debt.

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    [QUOTE=ucrenegade;4487190][url]http://finance.yahoo.com/news/u-debt-load-falling-fastest-040045522.html[/url]


    WASHINGTON (MarketWatch) — Everyone knows America has too much debt. What they don’t know is that things are getting better, not worse.
    Little by little, our economy is reducing its debt burden, slowly repairing the damage caused by 10, 20 or 30 years of excess.
    If you want to know why economic growth has been so tepid, here’s your answer. Four years after the storm hit, the economy is still deleveraging. And it’s very hard for any economy to grow when everyone is focused on increasing their savings.
    Total domestic — public and private — debt as a share of the economy has declined for 12 quarters in a row after surging over the previous decade.
    The rapid rise in federal debt over the past four years has distracted us from the big picture. The level of public debt is indeed worrisome, but it’s not as big a worry as the economy’s total level of debt — public and private.
    Although we have a whole cottage industry devoted to warning us about the dangers of too much public debt, we don’t have any comparable Cassandras telling us about the dangers of too much private debt. Yet the history of the past 30 years (or 300) clearly shows that too much debt, of whatever variety, can pose a systemic risk to the national and global economies.
    As much as we hear politicians, pundits, tea-party patriots and the Congressional Budget Office obsessing about government debt, it was excessive private debt — not public debt — that caused the 2008 financial meltdown. And it was private debt — some of it since transferred to the public — that lies behind the current European debt crisis. (Greece is unique in having a public sector that ran up spending while its private sector is rather conservative.)
    As the political rhetoric about the federal deficit has heated up, we’ve lost sight of the progress that’s been made in bringing total debt back under control. The U.S. is actually doing much better than you’d think if you just listened to the conventional fears about how we’re rushing headlong into a debt Armageddon.
    In fact, since the recession ended in June 2009, total U.S. debt has risen at the slowest pace since they began keeping records in the early 1950s. While Washington has taken on a lot of debt since then, the private sector has paid off, written off or dumped on the government almost as much.
    As a share of the economy, debt has plunged as a consequence of rapid deleveraging by families, banks, nonfinancial businesses, and state and local governments. The ratio of total debt to gross domestic product has fallen from 3.73 times GDP to 3.36 times.
    In the 11 quarters since the recession officially ended, total domestic debt has risen by just $702 billion, or 1.4%. By contrast, in the 11 quarters before the recession began, in those bubble years of 2005, 2006 and 2007, total debt increased by $10.7 trillion, or 28%.
    And it wasn’t just the U.S., other advanced economies were adding on to their debt loads as well, with most of the debt taken out by the private sector.
    Debt was growing at an unsustainable pace, but it was fueling the U.S. and global economies.
    Economists who have studied the impact of indebtedness have found that low levels of debt are essential to growth, but that high levels of total outstanding debt can hurt an economy. Beyond a tipping point, adding on more debt will reduce growth over the long run, even if it inflates a bubble in the short run.
    “At low levels, debt is good. It is a source of economic growth and stability,” concluded Stephen Cecchetti, M.S. Mohanty and Fabrizio Zampolli, economists for the Bank of International Settlements, in a paper presented at the Federal Reserve’s Jackson Hole conference last August. “Beyond a certain point, debt becomes dangerous and excessive,” and can lead to increased volatility, financial fragility and slower growth. It can even bring down the real economy with it, as we have seen. Read the BIS paper, “The Real Effects of Debt.”
    Cecchetti and his co-authors found that growth can be impaired once nonfinancial corporate debt hits about 90% of GDP, or when household debts hit 85% of GDP, or when public debts hit about 85%.
    In the U.S., household debt has now fallen to 84% of GDP from a peak of 98%. Nonfinancial corporate debt has fallen to 77% from a peak of 83%. Financial sector debt has plunged from 123% of GDP to 89%. Public debt has risen to 89% from 56%.
    The deleveraging process in the private sector still has a ways to run, not based on some economists’ rule of thumb, but based on what real people are actually doing. Banks and households are still slashing their debt, while nonfinancial companies are beginning to borrow again, but only a little, according to the latest data from the Federal Reserve’s flow of funds report. Take a look at the flow of funds.
    According to a study by McKinsey published earlier this year, U.S. households may have two more years of deleveraging left before their debts are sustainable again.
    If McKinsey is right, the U.S. economy may have to endure a couple more years of slow growth.



    [B]again it is not obamas fault why the country was so bad he just happened to take it over when the other presidents luancy was coming to fruition..........Now he has been trying to put the country back together but needs more than 4 years[/B].[/QUOTE]

    He's made the country worse and has increased the FEDERAL debt which we all owe by 40% with NO results.

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    LOL to the premise of the OP. Private debt is going down because the banks are no longer giving out no income verification/no down payment sub prime loans. In the mean time public debt has almost doubled in just 3 years.

    The idea that Obama has helped the recovery is absurd as well. His policies have slowed the recovery and appear to have us headed back to recession. The Green Jobs initiative was supposed to help create 5 million jobs. Well we poured hundreds of billions in to it and actually lost Green Jobs in the process. The Obama energy policy has curtailed attempts at expansion of domestic energy exploitation as well. The EPA is in the process of shutting down close to 50 Coal Fired power plants through their regulatory overreach. If they don't reverse their stance hundreds of thousands of jobs could be lost there as well.

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    Call me crazy but isn't this article just saying that people and companies are taking on less debt or in many cases went bankrupt and discharged their debt and are now living on cash, probably, within their means while the government fiddles and spends while the government debt explodes?

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    [QUOTE=Trades;4487363]Call me crazy but isn't this article just saying that people and companies are taking on less debt or in many cases went bankrupt and discharged their debt and are now living on cash, probably, within their means while the government fiddles and spends while the government debt explodes?[/QUOTE]

    Yes, that's exactly what it says.

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    [QUOTE=Austin;4487466]Yes, that's exactly what it says.[/QUOTE]

    Could have been a much shorter article then.

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    As a share of the economy, debt has plunged as a consequence of rapid deleveraging by families, banks, nonfinancial businesses, and state and local governments. The ratio of total debt to gross domestic product has fallen from 3.73 times GDP to 3.36 times.


    to me what I got out of it is some of the regulations including ones by big banks that are partially owned by the goverment are finally paying off and even though wall street is not totally regulated some of it has been and now it is paying off and CEO's and stuff can not line their pocket as much.......

    i still think some more deregulation needs to happen but we are on our way. At least I hope if obama gets 4 more years...........if not then we prob will be back where we started as another pres will prob just help their friends get rich and widen the class gap.

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    [QUOTE=ucrenegade;4487639]As a share of the economy, debt has plunged as a consequence of rapid deleveraging by families, banks, nonfinancial businesses, and state and local governments. The ratio of total debt to gross domestic product has fallen from 3.73 times GDP to 3.36 times.


    to me what I got out of it is some of the regulations including ones by big banks that are partially owned by the goverment are finally paying off and even though wall street is not totally regulated some of it has been and now it is paying off and CEO's and stuff can not line their pocket as much.......

    i still think some more deregulation needs to happen but we are on our way. At least I hope if obama gets 4 more years...........if not then we prob will be back where we started as another pres will prob just help their friends get rich and widen the class gap.[/QUOTE]
    [IMG]http://josiahcm.files.wordpress.com/2011/02/facepalm_jim_76437.jpg?w=360&h=450[/IMG]

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    [QUOTE=ucrenegade;4487190]


    again it is not obamas fault why the country was so bad he just happened to take it over when the other presidents luancy was coming to fruition..........Now he has been trying to put the country back together but needs more than 4 years.[/QUOTE]

    ummm....[B][I]NO[/I][/B]. :rolleyes:

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    [QUOTE=quantum;4487658]ummm....[B][I]NO[/I][/B]. :rolleyes:[/QUOTE]

    Ask him what lunacy Bush did to cause the housing collapse.

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    [QUOTE=ucrenegade;4487190]
    again it is not obamas fault why the country was so bad he just happened to take it over when the other presidents luancy was coming to fruition..........Now he has been trying to put the country back together but needs more than 4 years.[/QUOTE]

    I find it hilarious that you start a thread asking what you are, pretend you're in the middle of the road and post only left-sidedly (SIC)...

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    [QUOTE=AlwaysGreenAlwaysWhite;4487669]I find it hilarious that you start a thread asking what you are, pretend you're in the middle of the road and post only left-sidedly (SIC)...[/QUOTE]
    The multi-handled uses multi-channels to push one agenda; his achilles heel is that he can't fake intelligence.

    In relative JI pol/world.events terms, it's an ancient game, one always coming from the left, though.

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    Twice as many people on food stamps then 4 yeas ago. Take off the Obama sunglasses. Bill Clinton gives more praise to Mitt then Obama.

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    [QUOTE=ucrenegade;4487639]As a share of the economy, debt has plunged as a consequence of rapid deleveraging by families, banks, nonfinancial businesses, and state and local governments. The ratio of total debt to gross domestic product has fallen from 3.73 times GDP to 3.36 times.


    to me [B]what I got out of it is some of the regulations including ones by big banks that are partially owned by the goverment[/B] are finally paying off and[B] even though wall street is not totally regulated some of it has been and now it is paying off and CEO's and stuff can not line their pocket as much.......[/B]

    [B]i still think some more deregulation needs to happen[/B] but we are on our way. At least I hope if obama gets 4 more years...........if not then we prob will be back where we started as another pres will prob just help their friends get rich and widen the class gap.[/QUOTE]

    Yea, stealing money from one person to give to another and bridge the "class gap" is one of the 10 Commandmentz :rolleyes:; however, bridging the widening intelligence gap[B] is[/B] a poser...thank Gd I "have" where so many others "have not". You don't even know what you have read or what you are saying here.
    Last edited by Jungle Shift Jet; 06-09-2012 at 11:07 AM.

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    Ask him what lunacy Bush did to cause the housing collapse.







    [B][COLOR="Red"][SIZE="7"]WELL?????????[/SIZE][/COLOR][/B]

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    [url]http://www.youtube.com/watch?v=LPSDnGMzIdo[/url]



    Who's your daddy??? The (FAILED) community reinvestment act 125% loans to UN-qualified minority's!!!! Which, by the way Odumazz is trying to resurrect. Typical Dem strategy, do damage, leave office and blame the other guy when the sht hitz da fan.
    Last edited by acepepe; 06-09-2012 at 11:57 AM.

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    Blame other!!
    Sorta like the criminal empire of the Kennedy's (right IGF) blame Reagan for letting the looney's out to fend for themselves. Good way to assuage the guilt for lopping off the front of your daughters brain.

    Deinstitutionalisation
    From Wikipedia, the free encyclopedia
    Jump to: navigation, search
    This article is about the replacement of psychiatric hospitals. For the replacement of orphanages, see Deinstitutionalisation (orphanages and children's institutions).

    Deinstitutionalisation (or deinstitutionalization) is the process of replacing long-stay psychiatric hospitals with less isolated community mental health services for those diagnosed with a mental disorder or developmental disability. Deinstitutionalisation works in two ways: the first focuses on reducing the population size of mental institutions by releasing patients, shortening stays, and reducing both admissions and readmission rates; the second focuses on reforming mental hospitals' institutional processes so as to reduce or eliminate reinforcement of dependency, hopelessness, learned helplessness, and other maladaptive behaviours.[1]

    According to psychiatrist Leon Eisenberg, deinstitutionalisation has been an overall benefit for most psychiatric patients, though many have been left homeless and without care.[2] The deinstitutionalisation movement was initiated by three factors:

    A socio-political movement for community mental health services and open hospitals;
    The advent of psychotropic drugs able to manage psychotic episodes;
    A financial imperative to shift costs from state to federal budgets.[2]

    According to psychiatrist and author Thomas Szasz, deinstitutionalisation is the policy and practice of transferring homeless, involuntarily hospitalised mental patients from state mental hospitals into many different kinds of de facto psychiatric institutions funded largely by the federal government. These federally subsidised institutions began in the United States and were quickly adopted by most Western governments. The plan was set in motion by the Community Mental Health Act as a part of John F. Kennedy's legislature[clarification needed] and passed by the US Congress in 1963, mandating the appointment of a commission to make recommendations for "combating mental illness in the United States".[3]

    In many cases the deinstitutionalisation of the mentally ill in the Western world from the 1960s onward has translated into policies of "community release". Individuals who previously would have been in mental institutions are no longer continuously supervised by health care workers. Some experts, such as E. Fuller Torrey, have considered deinstitutionalisation to be a failure,[4] while some consider many aspects of institutionalization to have been worse.

  19. #19
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    [QUOTE=AlwaysGreenAlwaysWhite;4487669]I find it hilarious that you start a thread asking what you are, pretend you're in the middle of the road and post only left-sidedly (SIC)...[/QUOTE]

    because at the time i did not know how to classify myself.................I go with what I see whether he is rep or dem i do not affiliate myself with a party and stay blind. I go by the issues........I will vote for whoever I think is best...........


    oh and regan gave the man who thought of trickle down econmoics a pulitzer we see how well that worked out when they took their business's and went overseas.

    clinton deregulated wall street and allowed deravitives to take place causing the boom in economy in the 90's even though we are paying for it now

    also in 1996 the law was passed that killed the mom and pop media outlets allowing groups like clear channel and time warner to have monopolies.

    bush jr was in office that kept putting off renovations that needed to be made to make the levees up to code sothey would not break when a hurricane hit in new orleans.

    he also took forever to respond to a one of the worst natural disasters ever if that hurrican hit brentwood or d.c they would have had people and supplies there immediately.

    oh and our economy crashed in 2008 a full 4 months before obama was even elected even though it was on a downward spiral for years with these wall street deravitives.

    I admit obama has not been great but trying to blame him for fixing other presidents idiocy is just that idiotic.

    How can you expect to repair something in 4 years that took 20 years to destroy is beyond me and it is just magnified because of the technolgy we have now..........

    if we could tweet some of the **** the other presidents did we would have impeached them but just like the new york jets or religion stops people from trying to think rationally and go with the mob........

    mob mentality never produces anything good or are they ever right..........


    JMO
    Last edited by ucrenegade; 06-13-2012 at 04:43 PM.

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    [QUOTE=ucrenegade;4490947]because at the time i did not know how to classify myself.................I go with what I see whether he is rep or dem i do not affiliate myself with a party and stay blind. I go by the issues........I will vote for whoever I think is best...........


    oh and regan gave the man who thought of trickle down econmoics a pulitzer we see how well that worked out when they took their business's and went overseas.

    clinton deregulated wall street and allowed deravitives to take place causing the boom in economy in the 90's even though we are paying for it now

    also in 1996 the law was passed that killed the mom and pop media outlets allowing groups like clear channel and time warner to have monopolies.

    bush jr was in office that kept putting off renovations that needed to be made to make the levees up to code sothey would not break when a hurricane hit in new orleans.

    he also took forever to respond to a one of the worst natural disasters ever if that hurrican hit brentwood or d.c they would have had people and supplies there immediately.

    oh and our economy crashed in 2008 a full 4 months before obama was even elected even though it was on a downward spiral for years with these wall street deravitives.

    I admit obama has not been great but trying to blame him for fixing other presidents idiocy is just that idiotic.

    How can you expect to repair something in 4 years that took 20 years to destroy is beyond me and it is just magnified because of the technolgy we have now..........

    if we could tweet some of the **** the other presidents did we would have impeached them but just like the new york jets or religion stops people from trying to think rationally and go with the mob........

    mob mentality never produces anything good or are they ever right..........


    JMO[/QUOTE]


    Regan (sic) gave "the man who thought of trickle down economics" a Pulitzer Prize? It's awarded by Columbia U. chiefly to liberal journalists.

    Deravitives (sic) caused a boom in the economy?

    Bush jr (sic) put off renovations to levees? It wasn't environmentalists that kept suing to prevent that from happening for decades prior?

    Keep posting just like this only more often. We need the laughs coming to keep us from crying until November when the laughter really begins.
    Last edited by Jungle Shift Jet; 06-13-2012 at 06:53 PM.

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