America's Addiction to Debt Finally Crashes the System

[marmar]

from AlterNet:



America's Addiction to Debt Finally Crashes the System

By John F. Ince, AlterNet. Posted September 18, 2007.


Market evangelists created the wreckage, but ordinary working people will bear the greatest burden.


We have to deal with the fundamental reality that Americans are addicted to debt. Debt today in the United States is at an all-time high in each of the three primary sectors: public, corporate and consumer debt. The national debt last week topped $9 trillion, up from approximately $5 trillion when George Bush took office.

To put this in perspective, the government of Bush & Co. has borrowed almost as much as the governments of all the other presidents of the United States combined. Consumer credit is now at scary levels almost: $2.5 trillion, and analysts are beginning to speculate that credit card debt could be the next bubble to burst. Corporate debt has reached astronomical levels through highly leveraged private equity deals, and no one knows just how how much froth is still in the system.

Central banks worldwide have reacted to the crisis by injecting over $700 billion into the global financial system. This is an astronomical level of liquidity, but it seems somehow to defy any human element. However, it has intensely human consequences that will affect each and every one of us. By pumping so much liquidity into the system, it ultimately inflates the currency. Put in human terms, everything is going to start costing us more. Even worse, this approach simply postpones the eventual reckoning.

For the average worker who is already struggling to make ends meet, this could have devastating consequences. Median family earnings of $48,201 in 2006 were 2 percent less than they were in 2000. So already people are running on the economic treadmill, like hamsters, spinning faster, working harder and making less.

For those who had taken some measure of financial solace from the appreciation of their homes, the game has suddenly taken a turn into a dark tunnel. Prices which had become divorced from reality, are now being corrected with a vengeance. Here's the rub for homeowners: When real estate prices go down, the debt associated with those assets does not go down. This induces a downward spiral of asset values induced by negative leverage. With a record high of 15.75 percent of all subprime loans now 30 or more days past due, many homeowners now are stuck with negative equity. ......(more)

The complete piece is at: http://www.alternet.org/workplace/62787/

[Tripper11]

1. Wow..the phrase I had ro re-read twice to make sure I understood was..

"To put this in perspective, the government of Bush & Co. has borrowed almost as much as the governments of ALL the other presidents of the United States combined."

That is frightening!

[pscot]

2. Utterly incoherent

You can remain silent,and let people think you are an idiot, or you can speak out, and remove all doubt. Mr. Ince has chosen the latter course.

[Hydra]

5. I have to agree

Watch Money as Debt- money does NOT exist anymore except as debt. Those pieces of paper are based on the idea of labor that will eventually pay for what the paper claims to be worth...it has no worth now except in the confidence a person has that it can be used to purchase something.

That confidence is what is taking a hit.

[superkia]

6. Then they realize theirs only 1 block of gold left from Fort Knox. uh oh!

Then all the politicians and their wealthy friends paper turns worthless, Bush calls for martial law and we have to work in camps to run the country for the wealthy so we can get some bread and hopefully clean water.

[Hydra]

10. Probably

Read some of the dirty laundry of the great depression- gold was seized "for the greater good." We haven't been on a gold or silver standard for a VERY long time.

As for the camps, they know it's cheaper to keep someone in economic slavery rather than physical bondage...a funny lesson from "abolition." They pay you not enough to survive, and you have to borrow money to stay afloat...and you still have to pay for your shelter, food and other essentials. The camps will be for people like us who wont shut up about how unfair things are :evilgrin:

[superkia]

11. I think it mentions that they can force citizens to be part of work...

forces or something during martial law. I thought that was what I read when he had first signed it.

[Hydra]

12. Yup, and that's how I read it too

until I thought about an entire country in camps...it's unfeasable and unnecessary. Most people will shut up and go to work, even while under constant surveillance an harassment from homeland security or whoever is in charge.

For the ones who won't go along with the plan, there are the camps. I expect to see many of my fellow DUers there. :evilgrin:

[shireen]

3. outrageous

the Bush Jr. and Bush Sr. will go down in history as big spenders, at the expense of the American public. Of course, they and their cronies won't be affected, they got plenty of money in the bank.

The article hints that class warfare will become a major problem as this mess unravels. The only solution will be restoring higher taxes for the rich because, dammit, trickle-down economics does not work!

[fenriswolf]

8. trickle down economics

isnt trickle down economics where we give all the money to the rich to the point where their pockets are overflowing and the overflow eventually rolls down from their mansions on the hills to the slums that we live in? or is that just my percieved notion of it.

[lumberjack_jeff]

9. That's the way they market the idea

And welcome to DU!

[CGowen]

4. pyramid schemes never worked n/t

[MazeRat7]

7. There is so much wrong with this article, it pointless to even try and respond.

While is has a nice "rally the troops sub-title"... Market evangelists created the wreckage, but ordinary working people will bear the greatest burden the generalizations presented within are too broad and disjointed to have any meaning, basis, or implication. :wow:



MZr7

[high density]

13. Not yet, Bernanke just delayed it a few more months.

Remember to spend spend spend, everybody!

[4_TN_TITANS]

14. Someone needs to tell him about the lost surplus Clinton left

"up from approximately $5 trillion when George Bush took office."