Lawrance G Lux, click
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Blogs by Lawrance G Lux
Consumer Debt 1/12/2004 7:02:51 PM
November stats show Consumer Debt rose to over $2 trillion. A very bad number all the way around! It means a Credit Card debt of $9000 per Household, $13,000 per Household among actual debt-retention Households.
The real problem comes in the total debt of American Households, which is over $9 trillion. Such Debtor Households have less capacity to pay this debt, than does the U.S. Government's ability to pay the National Debt under the Bush Tax Cuts. The trouble sits in the fact Households must pay this Debt within a requisite Time frame. Economists claim these Debtor Households need only pay the finance charges, a ludicrous supposition, unless these Economists these Households can cancel all future purchases and consumption; a marked horror for the Economy.
A private letter in a Newspaper suggests the Stock Market increases are only reflection of Inflationary pressures in the Economy. A plausable thesis which could be partially right.
Let's look at a potential Scenario:
Foreigners are buying U.S. Treasuries at an incredible rate. The Dollar, though, is dropping in value, and the Fed and Treasury will not let Interest rates rise. Imported Products are rising in Price, and demand for Treasuries is dropping Overseas, as the Interest rates do not keep pace with Inflation. American Households are deeper in debt than ever before. Domestic subscriptions of Treasuries is declining. The actual deficit of the Bush administration is actually still accelerating, as the gap between Government spending and tax revenues continues to widen. State and Local Government debt is starting to expand. I perdict there will be a financial crisis far greater than the S&L Bailout of the mid-1980s before the next Presidential Election, which may be good; Candidates will have to go on record about Corrective measures before the Election. Current trends assure there will be such a financial crisis. lgl
