TranceAddict Forums (www.tranceaddict.com/forums)
- Political Discussion / Debate
-- America's Debt = "We're Screwed!"
Pages (16): [1] 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 »

America's Debt = "We're Screwed!"

The American population seems to be very concerned about the "War on Terror", "War on Drugs" and the "Iraq War". I believe there is a more sinister, covert, and long term "War" that we should focus on, "The War of the American People's Finances".
An average American family has $8300.00 of credit card debt and 80% of all credit cards are controlled by 5 financial entities, a large amount of financial control in a small group. We are seeing individuals purchasing large homes, of which they are not qualified, taking on 30 year and now even 40 year "interest only" monster loans, with disturbing regularity.
Americans are under an assault of marketing, with constant reminders of how fancy homes, impulse shopping sprees (usually targeting females)and accumulation of goods equals happiness and a high status. I'm frightened by statements like these, "It's ONLY one hundred dollars", "Only 10 EASY payments" and "No interest for a WHOLE year!"
The obsession with credit has given rise to a whole new breed of scam artist and loan shark, for lack of a better term. APRs of 19%, 28% and even higher ensure that a debtor is totally fuct for the rest of their days. Nothing like graduating and suddenly having to pay a $650.00 per month student loan payment, which if you default on a G.S.L. you are REALLY fuct then.

Debt will be the true downfall of United States.

What do you think?

Add Fractional Reserve Banking and the Federal Reserve to that list. That's what's really screwing us.

quote:

Originally posted by shaolin_Z Add Fractional Reserve Banking and the Federal Reserve to that list.

Agreed.....(I wanted to keep the post short)

quote:

That's what's really screwing us.

Possible...but,
I think that the REAL downfall will come from personal debt, rather than at the Federal level.

Re: America's Debt = "We're Screwed!"

quote:

Originally posted by zookeeper The American population seems to be very concerned about the "War on Terror", "War on Drugs" and the "Iraq War". I believe there is a more sinister, covert, and long term "War" that we should focus on, "The War of the American People's Finances". An average American family has $8300.00 of credit card debt and 80% of all credit cards are controlled by 5 financial entities, a large amount of financial control in a small group. We are seeing individuals purchasing large homes, of which they are not qualified, taking on 30 year and now even 40 year "interest only" monster loans, with disturbing regularity. Americans are under an assault of marketing, with constant reminders of how fancy homes, impulse shopping sprees (usually targeting females)and accumulation of goods equals happiness and a high status. I'm frightened by statements like these, "It's ONLY one hundred dollars", "Only 10 EASY payments" and "No interest for a WHOLE year!" The obsession with credit has given rise to a whole new breed of scam artist and loan shark, for lack of a better term. APRs of 19%, 28% and even higher ensure that a debtor is totally fuct for the rest of their days. Nothing like graduating and suddenly having to pay a $650.00 per month student loan payment, which if you default on a G.S.L. you are REALLY fuct then. Debt will be the true downfall of United States. What do you think?

I think we got ourselves another economics major in our midst. Finance? Maybe accounting. How many government majors do we have?

-sigh-

You kids. Some of you have your hearts in the right place, and ya certainly got the brains, but so young and impressionable.

Anyway, thats just what I think. Heres what everyone else thinks.

Re: America's Debt = "We're Screwed!"

quote:

Originally posted by zookeeper The American population seems to be very concerned about the "War on Terror"...

Most people have been desensitized by 9/11. There is a movie comming out about flight 93, and the only people actually fighting this movie are the widowed "victims". We won't be concerned about the war on terror until Bin Laden is captured, then of course, the american people will think that the war on terror is over. Sadly, the war on terror will never end.

quote:

"War on Drugs"

Americans haven't given a shit since reagan left office. The only time the war on drugs is even mentioned, is when a drug is made illegal (ex. Salvia).

quote:

and the "Iraq War".

Americans are only concerned, when people die. That's all, end of discussion.

quote:

Originally posted by Josh4 You kids. Some of you have your hearts in the right place, and ya certainly got the brains, but so young and impressionable.

Get off your rocking chair grandpa. Your wisdom from living so long gives you the right to dismiss an idea?

Re: America's Debt = "We're Screwed!"

quote:

Originally posted by zookeeper The American population seems to be very concerned about the "War on Terror", "War on Drugs" and the "Iraq War". I believe there is a more sinister, covert, and long term "War" that we should focus on, "The War of the American People's Finances". An average American family has $8300.00 of credit card debt and 80% of all credit cards are controlled by 5 financial entities, a large amount of financial control in a small group. We are seeing individuals purchasing large homes, of which they are not qualified, taking on 30 year and now even 40 year "interest only" monster loans, with disturbing regularity. Americans are under an assault of marketing, with constant reminders of how fancy homes, impulse shopping sprees (usually targeting females)and accumulation of goods equals happiness and a high status. I'm frightened by statements like these, "It's ONLY one hundred dollars", "Only 10 EASY payments" and "No interest for a WHOLE year!" The obsession with credit has given rise to a whole new breed of scam artist and loan shark, for lack of a better term. APRs of 19%, 28% and even higher ensure that a debtor is totally fuct for the rest of their days. Nothing like graduating and suddenly having to pay a $650.00 per month student loan payment, which if you default on a G.S.L. you are REALLY fuct then. Debt will be the true downfall of United States. What do you think?

I agree 100% with you. I'll add that these people buy all these good, services, and "assets" then end up being a slave to them. They watch TV programs and read magazines that tell them how to live their lives and how to spend their money. They work at jobs they don't like to afford things they don't need. I sound like Tyler Durden, but this is true.


The U.S. Government recently raised the debt limit to 9 trillion dollars. If they hadn't, then the government would have begun defaulting on debt. And Bush and the Republicans still push for tax cuts to be permanent when we're a huge debt, in the middle of an occupation, and the verge of another war. And don't forget the money we're borrowing from China and the huge trade deficit with them.

I agree that the american consumer is up to his eyeballs in debt and that is a bad thing. Particularly when you realize that interest rates have gone back up and that mortgage equity withdrawal (people basically using their homes as an ATM to finance ridiculous purchases) has propped up consumer spending. Coupled with already sky-high energy prices, I think this country is headed for a consumer led recession which could potentially do serious damage to the economy. Remember that consumer spending makes up over 2/3 of the U.S. economy.

Bottom line, I don't see how consumer spending can keep growing, let alone maintain the current trend given the aforementioned reasons.

The upside of course is that with the ensuing fall off in demand, things like energy prices will hopefully fall back to more rational levels, but that's even questionable given the rapid growth of emerging markets like China, India, Russia, Brazil, etc. Yes, I'm bearish and pessimistic. Frankly, I don't understand how economic data continues to be so strong!

There are many more nations in the world with higher Debt to GDP than the USA.

Its not that the US is screwed, its just that it will be if it keeps this up...

You know my economic teacher said debt was good as long as it went back to something that would be an investment. the thing is that many Americans are stupid and spend more than they earn however my family doesn't so we have no debt. So HA!

credit is a good thing. It can be misused though, and it is.

quote:

Originally posted by Yoepus There are many more nations in the world with higher Debt to GDP than the USA. Its not that the US is screwed, its just that it will be if it keeps this up...

Likewise I'm unsure how fractional banking or the fed are tanking the economy. If that's the case than the entire world economy is screwed as I'm troubled to think of any economy (much less successful economies) that don't employ modern banking concepts such as those.

Re: Re: America's Debt = "We're Screwed!"

quote:

Originally posted by josh4 I think we got ourselves another economics major in our midst. Finance? Maybe accounting. How many government majors do we have? -sigh- You kids. Some of you have your hearts in the right place, and ya certainly got the brains, but so young and impressionable.

Graduating college in 1991 (Fine Art), I'm tickled that you think that I'm an econ/finance/govt. major.

I have just been around long enough to see this very disturbing trend of personal spending develop.
I remember when a "Gold Card" was something that was only given to the upper 1% income earners, credit card issuers used that image of success to market to "dreamers" who really wanted to live "Lifestyles of the Rich and Famous". Now, I can rattle off at least 7 shows, that I know of, that use the same formula.

I have a feeling that much of the consumer debt may have been created by women practicing "retail therapy" (a term that was coined only recently...and I hate it)

Does anyone have any facts or statistics, I could use, to back this claim?








...I'm aware this may lead to some flames, and am prepared.

Re: Re: Re: America's Debt = "We're Screwed!"

quote:

Originally posted by zookeeper Graduating college in 1991 (Fine Art), I'm tickled that you think that I'm an econ/finance/govt. major. I have just been around long enough to see this very disturbing trend of personal spending develop. I remember when a "Gold Card" was something that was only given to the upper 1% income earners, credit card issuers used that image of success to market to "dreamers" who really wanted to live "Lifestyles of the Rich and Famous". Now, I can rattle off at least 7 shows, that I know of, that use the same formula.

The reason why consumer spending has been healthy for the past several years is because it has been cheap to spend money for a few reasons. The primary three reasons are: growing employment, rising home prices, and expanding stock portfolios. The principle reason, imo, for why consumers are so able to spend so much, and not necessarily go into the debt calammity you describe, is the mortgage/refinancing boom. The housing boom has enabled property owners to refinance their mortgages to take advantage of lower interest rates, actually borrow more than they really needed to begin with, and still end up paying less than they previously did. The end result ... they have more free cash to spend than before without any additional debt obligations. It's like consolidating student loans ... at a time of high interest rates, you start off with loans that have floating rates that adjust to the relative high market rate, then when interest rates dip, you refinance or consolidate your loans to a low fixed rate ... now you have x amount of cash more a month to spend or save.

All in all, I'm not sure how much actual debt payments have increased relative to disposable income but that's the statistic you need to look for to answer your question. My guess is that because consumers still have significant amounts of credit, that it's not that huge otherwise lenders would certainly be far more attentive to their default risk exposure. Of course, despite all this, interest rate volatility could change consumer behaviour drastically.

Indeed, just yesterday news came out of consumer confidence reaching its highest level since in four years (and also a rise in existing homesales) despite rising oil prices and all other pesimistic reasons you can conjour up. This raised fears on Wall Street that the Fed might continue to drive interest rates up (despite a reason statement that it would stop doing this for a while) and sending the market down with it.

quote:

Originally posted by metalgearsolid You know my economic teacher said debt was good as long as it went back to something that would be an investment.

Yes, there is good debt. and bad debt.
Leaveraging your debt. by using the bank's money to buy a house for example, is good debt.
Credit / Consumer cards are bad debt. and as a kid, I watched my parents go through that mess.
You can't really go through life easily without a credit card, but try and be fiscally responsible because they can really screw your life up if you let them...

Re: Re: Re: Re: America's Debt = "We're Screwed!"

quote:

Originally posted by occrider The housing boom has enabled property owners to refinance their mortgages to take advantage of lower interest rates, actually borrow more than they really needed to begin with, and still end up paying less than they previously did. The end result ... they have more free cash to spend than before without any additional debt obligations.

...But the thing that makes me nervous is that, and I'm generalizing here, people are getting their "extra cash" through home equity loans, which imo is very dangerous. If there was a significant "event" you could have large numbers of people having foreclosures.

...and moving back in with Mom and Dad (the only people who actually own their home)

quote:

Originally posted by occrider otherwise lenders would certainly be far more attentive to their default risk exposure.

Doing some time in the banking industry, myself...
1. lenders set "lending goals" and the numbers that I saw were just unreal ie: 62,000,000.00+ for ONE month!

2. I saw some people's credit applications that had multiple collections and judgements, and were approved for a very high line.

3. Defaults were just seen as cost of doing business, for the income from interest charges and penalties was just too good to pass up.

quote:

Originally posted by Fir3start3r but try and be fiscally responsible because they can really screw your life up if you let them...

Such as the new practice of banks marketing Visa/MC, with limits starting at $6000.00+, to incoming college students, many of them with virtually no "money skills".

I compare this practice to hawks, picking off young birds as they leave the nest for the first time.


The discipline that is required, to use these high limit cards, is overwhelming for "older" (ie:me) people, let alone a 19 year old college student.

Re: Re: Re: Re: Re: America's Debt = "We're Screwed!"

quote:

Originally posted by zookeeper ...But the thing that makes me nervous is that, and I'm generalizing here, people are getting their "extra cash" through home equity loans, which imo is very dangerous. If there was a significant "event" you could have large numbers of people having foreclosures. ...and moving back in with Mom and Dad (the only people who actually own their home)

Well it could be legitimate extra cash if they're excercising their prepayment options of pre-existing high interest rate fixed mortgages, and switching to ARMs or a new fixed rate mortgage at a lower interest rate. I suppose I could actually look up the default rates to see what the trend was, but I'm not sure it would be very ethical of me to comment on it here .

quote:

Doing some time in the banking industry, myself... 1. lenders set "lending goals" and the numbers that I saw were just unreal ie: 62,000,000.00+ for ONE month! 2. I saw some people's credit applications that had multiple collections and judgements, and were approved for a very high line. 3. Defaults were just seen as cost of doing business, for the income from interest charges and penalties was just too good to pass up.

Yea I can't really comment outside of the mortgage industry.

Solution...

im pretty sure we're OWED more money than we OWE.

quote:

Originally posted by hiram im pretty sure we're OWED more money than we OWE.

OH yes, that's a whole different topic topic (another thread idea?!)

We keep forgiving debt in the interest of foreign relations

Re: Re: Re: Re: Re: Re: America's Debt = "We're Screwed!"

quote:

Originally posted by occrider excercising their prepayment options

Funny you should mention this,

Some morgage lenders, and I think this trend may be growing, are incorporating LARGE penalties for early payment. With the "hook" of low interest rates, but a BIG surprise in the fine print.


I think my whole point is that I don't like the fact that Americans are getting "comfortable" carrying a high six figure load of debt as just part of life.

Re: Re: Re: Re: Re: Re: Re: America's Debt = "We're Screwed!"

quote:

Originally posted by zookeeper Funny you should mention this, Some morgage lenders, and I think this trend may be growing, are incorporating LARGE penalties for early payment. With the "hook" of low interest rates, but a BIG surprise in the fine print.

Well I'm afraid you're taking extremes in the sub-prime market and trying to apply it across the entire mortgage industry. In the prime market, only about 2% of home loans carry prepayment penalties of any length.

Both Fannie and Freddie take a lot of effort to avoid the bad publicity of predatory lending as do many other institutions. I'm not sure this trend is as pervasive as you imply.

quote:

I think my whole point is that I don't like the fact that Americans are getting "comfortable" carrying a high six figure load of debt as just part of life.

Do you know the statistical trend in debt payments as a measure of disposable income? That was my singular question and it would eliminate all conjecture on the matter. I suppose I could try to look it up but I'm lazy .

Re: Re: Re: Re: Re: Re: Re: Re: America's Debt = "We're Screwed!"

quote:

Originally posted by occrider Do you know the statistical trend in debt payments as a measure of disposable income? That was my singular question and it would eliminate all conjecture on the matter. I suppose I could try to look it up but I'm lazy .

That would be interesting....get on it!!

I was up to my eyeballs in a VISA card and government tax payments once.
Took almost a year of accelerated payments to get rid of them both (both totaled approx. 12K).
It's all over with now but man that sucked large.

Now I collect those payments as extra downpayment towards a nice condo in the area

My advice, bite the bullet, accelerate the payments on your debts while saving a bit on the side.
Consumer debt. is bad mmm'kay?

Powered by: vBulletin
Copyright © 2000-2021, Jelsoft Enterprises Ltd.