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Greenspan Misread It! 2/23/2004 6:19:18 PM
Fed Reserve Chairman released Household data information, along with a complete misinterpretation of the data. His claimed cause not to worry contain the real worry itself.
Greenspan claimed the amount set aside on average (13%) to repay Household debt, and the amount set aside to pay wider financial obligations (18%) on average, showed that American Households were in good shape financially. Nothing could be further from the truth.
These numbers had risen from the average ratios prior to the Recession. The rise in the average ratios derived from the economic constrictions of the Recession. The danger comes in that Household debt has continued to rise, while the ratios show no sign of following with the advent of the Recovery. The Fed is currently maintaining an Interest rate structure which is not sustainable of the long-term, and will eventually have to be raised to save the Dollar.
The increase of Household debt indicates American Households are overspending their Income, and need to realign their expenditure patterns to conform to current obligations, in a Scenario of rising Interest rates. The Recovery is not sustainable unless the American Economy can generate the Jobs necessary to provide the Income and Overtime to reduce the Household debt service, and return these Household to normal spending patterns. lgl
