Personal Debt. Worse now than the Depression

[MissMuffitt]

http://www.abc.net.au/news/stories/2007/10/10/2056188.htm?section=business

I was wondering what you all thought of what this "Expert" has to say.

Are we going to have another recession in 2 years??

I'm very interested in your opinions...

MM

 

[Michael Croft]

yep, saw this article and wondered about a couple of things.
Personal debt is at an all time high, but ability to service that debt is high due to employment stats (rubbery as they are).
30% unemployment rates during the great depression had an effect on serviceability I would have thought. Not to mention flow on effects.
The mineral boom shows no sign of abating. China and India are still going gang busters and want our raw materials.
As they say, "put two economists in a room, and you get three opinions"
cheerio, Michael

 

[AYB]

i wonder does personal debt include mortgages?

i wonder what credit card debt per capita is, might be more telling.

 

[buzzlightyear]

i wonder does personal debt include mortgages?

i wonder what credit card debt per capita is, might be more telling.

Well I have a credit card and spend between $2k-$5k per month (depending on IP expenses) but have always paid off every month, however if you would look at my balance at any time, it is in those ranges. One thing to have an outstanding balance and another when that is accruing interest at 17%+....

 

[Sunfish]

i wonder does personal debt include mortgages?

Why shouldn't it? It's all bad debt if you can't afford the interest.

And the heading doesn't make a lot of sense either. Credit cards and lines of credit didn't exist. Mortgages did of course but nothing like they do today and the old ubiquitous hire purchase would have only been in it's infancy. If debt had anything to do with it, it would only have been from speculative borrowing for shares. Reckon there's any speculative borrowing today?

 

[nonrecourse]

Experts and all that

http://www.abc.net.au/news/stories/2007/10/10/2056188.htm?section=business

I was wondering what you all thought of what this "Expert" has to say.

Are we going to have another recession in 2 years??

I'm very interested in your opinions...

MM

I agree that trying to compare the level of debt prior to the 1929 crash and subsequent depression and the complex financial world we live in today is plain silly. The statement is put out there I think to draw attention to his view of an impending down turn.

I always view the debt statistics with some degree of caution. Anyone who owns and runs a small business particularly when first starting out will often have a line of credit via their home mortgage rather than take out a more expensive business loan. So the debt figures don't really mean much.

As for his view on a shake out I tend to agree. A whole generation of Australians have never experienced a full on recession and I would bet 99% of us did not experienced the last great depression.

What concerns me is hearing the famous "its different now" we are in a super
cycle......As one sage economist was quoted as saying...**** happens. Murphy's Law can and will happen and I subscribe to Fitzpattricks law, his law states that Murphy was an optimist

I think the next two years could be interesting