From: jamie@vax.ftp.com  (Jamie O'Keefe)
Subject: Re: Confronting the Deficit/Debt Boogyman
Nntp-Software: PC/TCP NNTP
Organization: FTP Software, Inc., Wakefield, MA
Date: Wed, 15 Apr 1992 13:01:11

nelson_p@APOLLO.HP.COM writes:

 > I agree.  And there's another debt issue here that nobody has
 > mentioned (See the front page of yesterday's WSJ for an article
 > on this):  *Consumer and corporate debt*.  Consumer debt is at 
 > 70% of GDP!   It has hardly declined at all during the recession
 > (although it might just be starting to)  Corporate debt is at nearly
 > 60% of GDP, down a bit from the start of the recession.

Take a look at the American Survey section of the April 4th issue 
of the Economist.  Outstanding Consumer credit as a % of Disposable
income has decined from its high point of ~22% in 1987.  It is about
18.4% now or about the level it was in 1983-84.
 
 > The whole country is in hock up to its eyeballs with the government
 > being the least of the offenders.

Yes.  And why is that?

 > And what's scary is that everybody is hoping for a "consumer
 > led" recovery where consumers will take advantage of low 
 > interest rates to borrow even more.  Consider Bush's  "buy
 > a house, buy a car" speech last fall: these are the two
 > biggest things people go into debt to buy! 

Good point.  An investment led recovery would be better.

 > On a personal note it pisses me off because I manage my money in
 > a conservative and responsible manner -- Except for my mortgage
 > I have no debt and haven't had any in years.  I save up and pay
 > cash for everything I buy.   But companies and property values
 > are expiring all around me.  If my property value drops by
 > $30K then I'm that much poorer just as surely as if the IRS
 > took it or I was held up at gunpoint.   But in this case it's
 > the stupidity, mismanagement, heavy debts and recklessness
 > of computer companies and banks in my area who are to blame,
 > coupled with debt-laden consumers who had insufficient savings
 > to ride out a layoff or recession.  (in my neighborhood there
 > are couples who make >$100K who don't have enough net savings
 > to make a month's mortgage payment!)  What I don't like is
 > that in this environment fiscally responsible people can
 > get dragged down by all the others.

I agree to a point.  (I also pride myself on not going into debt.)

What are these couples spending their money on?  If they have kids
then I can understand part of their trouble.  However, too many
people spend their money on stuff they really do not need.  Do we 
need big cars, the newest electronic equipment and the latest in 
designer (and not so designer) clothes?  Why do we want all of these
things and do they really make us happy?  Should we really spend
too much, go  into debt and save too little.  

Read "The Overworked American" for a number of ideas on why our society
is the way it is and how to change it.

 >>   Both Germany and Japan have high government deficits...
 >>
 Written my someone else:
 >>So what?   Their  high government deficits do  not  make our  situation any
 >>better.  Maybe we are all making the same disastrous mistakes.

You miss my point.  I was pointing out that Germany and Japan do not
have to worry as much about their deficits because they save a much
higher percentage of their income.  I am not agreeing with high
deficits.  After all it will most likely be my generation who will 
ultimately have to pay for it.

 > Yup.  I agree.  And with Japan (which has been underwriting much US
 > public debt) going into tough times, we may see the feces impact
 > the spinning blades real soon now . . . 

So what do we do to change it, eh?

jamie
--
Jamie O'Keefe		FTP Software, Inc.	Technical Support
Phone: 01-617-246-2920	Fax: 01-617-245-7943	Email: jamie@ftp.com

Newsgroups: sci.econ