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TOPIC: The_real_problem__
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poly Girl and dspghcouple,

You DO have debt. $32K per person and $100K per household. It is called the national debt. Sometime this week, probably late tomorrow, congress and the president will add another $2400 per person, $7500 per household to that debt.

What they are going to do is just keep printing money... Which will trigger hyper-stagflation. If you have money, you will see its purchasing power shrink rapidly. If you have debt, then it will shrink in real terms as we inflate it away.

We non-debtors are the suckers.

Glendale AZ
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you never know my-hy I used to work at a fancy department store. People would drop 1700 on ONE dress. And that didn't include the 700 dollar shoes and about 400 in costume jewels and 50 bucks for a pair of stockings........They would put it on the store credit card and pay it off at the end of the month. In our store you got discount coupons in the mail when you spent so much on your credit card so they always used to the cards. We had one lady who would go put in on the card and come to the office in the store and write us a check for the amount of the sale to be put in the card.

But I do agree for a lot of people the amount of credit they have and use is a huge problem. America in general tends to live well beyond its means, by use of credit and it is not a good thing.

Ok this is too much thinking for someone who just rolled out of bed. PG

Louisville KY
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GREED , and keeping up w/ the Jones mentality. we are a disposable society, we do not tend to save a dime, we borrow too much and not worry about how it will ,or when it will be paid back. we borrow money to speculate with. ( that we cannot afford to do) and the worst part is we are still doing it .

and the best part is there is really no one to blame except our selves I really love seeing or reading replies to why some cannot understad why their payments went up...Gee did they read the loan documents ,or did they just read the amount they were getting to spend ?

the sad part is it is not over by a long shot

Middletown NY
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What is wrong with our economy? What is the root source of all the troubles?

Simple. For the last decade, wages have not kept up with inflation, yet we've continued to increase our standard of living. Consumer spending increasing faster than inflation while wages are not keeping up with inflation... How is this possible.

Simple. DEBT.

More and more of our consumer spending has been financed.

The Fed produced a report called the Z.1.

Just look up Federal Reserve z.1 report on Yahoo or Google. Then look at table D.3, debt outstanding by sector.

1993: $4.224 trillion in consumer debt and $3.681 trillion in business debt. 2008: $14.011 trillion in consumer debt and $10.909 trillion in business debt.

1993: 92-ish milion households and $44K in debt per household 2008: 116 million housholds and $126K debt per household.

180% increase in per household debt. 20% increase in incomes over those 15 years.

For the last few years, it got so bad, the AVERGAGE American consumer was spending 10% more than they earn. Much of it supplied by borrowing against rising real estate values.

That can not continue forever.

Just to stop getting further into debt would require a 10% drop in consumer spending. With an economy 66% consumer spending, that alone would be the worst recession since the Great Depression. The ripple effect as that spending cut results in unemployment, resulting in bigger spending cuts, resulting in less spending.... You get the idea.

But it is much worse than just having to begin living within our means. Much of the existing debt is going to go away, meaning many people that think they are rich, will find out they are not.

The real estate bubble has popped, and now real estate prices will return to 2001 (+10% for wage growth). As prices correct, there will be a net $3 trillion in upsidedown-ness of houses with mortgages. Since not every house with a mortgage will be upsidedown, the houses that are upsidedown will be upsidedown by a total of some $5 trillion.

To put this into prospective, all the federal budget deficits for the last 30 years summed up = $5 trillion.

This giant $700 billion bailout will cover losses for about 6 months.

And, commercial property is every bit as overpriced and over mortgaged as residential. As that bust gets rolling, there will be trillions more in lossess.

This is ugly beyond anything we've seen since the Great Depression, and may end up being even worse than that.

Good thing our favorite hobby, sex, isn't too expensive.

Glendale AZ
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TOPIC: The real problem
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