Why do people gnash their teeth and wring their hands over the federal deficit, but...?

-dismiss consumer debt as a non-issue?



We've built an economy based on debt-driven consumption. How long can that be sustained? Consumer debt rose in the last quarter, after declining for eight quarters (mostly because credit was not available), but it is still near historically high levels.



I know everyone HERE is debt free (ahem). But SOMEONE is carrying $14 trillion of consumer debt. What happens to our economy when 40+ year olds enter their senior years with high debt and insufficient investments to support themselves?



Isn't ignoring consumer debt levels what got us in our present situation?Very few dismiss consumer debt, but all the air in the room is consumed by the present Congressional sideshow.



In the middle of the last decade, many analysts and ordinary folk monitored and raised alarms about growing consumer debt even as the jobs that supported that debt evaporated. John Mauldin, for instance, wrote about the inevitability of a consumer debt crash frying the nation long before 2007. Nor was he the only analyst. Mauldin correctly plotted the "muddle through" economy that we have now, well before the crash. I use him as an example that many were, and are, very concerned about private debt levels and the Greenspan bubbles that brought them into being.



The surprising nature of the high current debt lies in the fact that consumers have been "deleveraging" aggressively since the crash. Consumer deleveraging dominated the first two years of the crash. This year, however, we have embarked into state-level deleveraging, driven by the ALEC plan and newly-dominant Republican legislatures and governors. State-level deleveraging and job destruction has brought the nascent recovery to a halt and may have begun a new downturn. The ALEC plan believes this brings the best political advantage to the 2012 elections.



A significant portion of that consumer debt doesn't exist. A huge amount of mortgages are being carried at face thanks to efforts to shore up bank capital, though they are not actually being currently paid. It's similar to BofA et al refraining from placing properties in foreclosure, even though they are in default, so they can continue to carry the asset with a wink and a nod.



How much of that consumer debt actually exists is anybody's guess.conservative main stream media.





The simple fact is that the public debt has ZERO impact on your day to day life. Private debt is a much larger problem, as you have pointed out. It is also what is keeping demand low in our economy. People under water on their mortgage have less expendable income.
Our system is a debt society. We can no escape it. The Bankers have us on a tread mill. When you have money to pay cash you will be taxed forever on land or personal property. The main enemy to the people are the Bankers and Profession Politicians.
The standard of living has steadily decreased & people borrowed to maintain their previous standard of living.
Conservatives want to lower min wage so we will all go deeper debt to the same people who fund the Republican's campaigns.



Wage slavery for all.
The only debt I have is hospital bills. I've never even owned a credit card. I buy second hand rather than on credit.
I do borrow for home and auto, but nothing else and I can easily afford my monthly payments, unlike da government.
RUBBER CHECKS FOR EVERYONE
I agree to a point. But there is much more to just consumer debt and savings than what the average person knows about. Debt driven consumption drives the economy, there is no real money flying around for every purchase made. Interest is the hope that keeps the financiers continuing to allow the average Joe to make his purchase. If it were not the idea that more money can be created from a purchase from credit rather than cash, we would be in a stale market. The problem is, when government involved themselves and bought into major corporations at the tax payers expense it started to unravel.



The idea of our economy working properly based off the government allowing Additional tax breaks for the rich only shows that these businesses and Mega corporations are spoiled and care for only themselves. They realize they are killing our Nation and Truly do not care. They will not hire unless they get tax breaks that allow for more profit. When actually it is the Government that pays our check.



We were warned by a past President that this would eventually happen if we did not watch out for Private sectors buying into Government.

And controlling interest.

We have painted ourselves into a corner with no real way out. We are financially ruined.