Slow Learning Curve In Washington

Posted By on July 31, 2011

Slow learners……we’re talking about the government of course! They want banks to loan out more and consumer borrowing to pick up.  They still don’t get it!

Household debt levels are at 112% of annual income which is considered too high. To get back to a 1990’s debt-to-income ratio’s of 84%, incomes would need to be nearly $4 trillion higher.  This would take about nine years worth of income growth, according to Credit Suisse estimates. 

Incomes are shrinking as shown in the chart below.

The U.S. economy has been expanding slowly for two years now, and economists had been expecting it to pick up steam in the second half as robust overseas demand and investment at home by cash-rich companies spured consumers to spend, even as they reduce their debt burdens. But Friday’s GDP report and the impact of Washington’s debt-ceiling stalemate on consumer and business confidence as well as on financial markets are raising doubts about that outlook.

It could be years before Americans feel that they’ve pared enough debt to start spending readily. Household debt levels are at 112% of annual income which is considered high. To get back to a 1990s debt-to-income ratio of 84%, incomes would need to be nearly $4 trillion higher.  This would take about nine years worth of income growth, according to Credit Suisse estimates.

Robert Hall, a Stanford University professor, says that three-quarters of households don’t have two months worth of income socked away as cash or other liquid assets. Further more Federal Reserve researcher Karen Pence says that 41% of households can borrow less than $3,000 on their credit cards and 23% have been turned down or discouraged from applying for credit.

Meantime, the government’s ability to serve as a shock absorber is for the most part gone. In 2003, when the economic recovery stumbled, the Bush administration pushed through tax cuts to get cash into the hands of households and the Fed pushed down interest rates to ease borrowing. In 2008 and 2009, the Obama administration and the Fed did it again, boosting federal spending in an $800-billion stimulus and cutting interest rates to near zero.

Now, with deficits sky high, the federal government is moving toward cutting spending. The Fed’s hands are now tied, as they can’t cut short-term rates below zero and are reluctant to pursue another round of buying mortgages and Treasury securities.  That’s because the last effort to push down long-term interest rates and stimulate growth had only marginal success.

About the author

Comments

20 Responses to “Slow Learning Curve In Washington”

  1. Sausalito Ferry Schedule

    Hey! I could have sworn I’ve been to this blog before but after checking through some of the post I realized it’s new to me. Anyways, I’m definitely happy I found it and I’ll be bookmarking and checking back often!|

  2. free ads says:

    freeads

    Classifieds Advertisings perceives all free,} has learned all.Try sell and purchase you’ll enjoy it.Pets,Business,PROPERTY,Vehicles advertisings shows good tastes,Our careers offer is bigger!

  3. buy viagra says:

    buy viagra

    I wish to express thanks to this writer just for rescuing me from this particular challenge. Right after exploring throughout the the net and getting thoughts which are not pleasant, I thought my life was well over. Being alive without the presence of…

  4. free software download

    Full Laptop or computer Game Download Free

  5. Congratulations! Your new commission account can now have up to $37,950.00 a month

    I woke up to see another $915.35 in my bank account

  6. Congratulations! Your new commission account can now have up to $37,950.00 a month

    I woke up to see another $915.35 in my bank account

  7. become a millionaire just pushing 3 buttons

    I saw this really great post today.

  8. maglie calcio

    Passion the website– really user pleasant and whole lots to see!

  9. Fodboldtrøjer Børn

    I appreciate reading your web site. Appreciate it! sites:ggglese.com

  10. fotbollströjor

    6r7a584eq l45gci billiga fotbollströjor 4oum0th 2asecw5r0h\n bp13thgo 1nia3uop4 maglie calcio bambino ftublgvrhm 7f8xky\n 075chnd eni54fs7w Billige Fodboldtrøjer eqxur78m vhepw7amk\n

  11. maglie calcio poco prezzo

    \n \n maglie calcio bambino \n \n \n \n \n fotbollströjor \n \n \n \n \n fotbollströjor \n \n \n

  12. maglia napoli

    \n \n billige fotballdrakter \n \n \n \n \n maglie calcio \n \n \n \n \n fußballtrikots Günstige \n \n \n

  13. chelsea trøje

    \n \n maglie calcio bambino \n \n \n \n \n maglie calcio a poco prezzo \n \n \n \n \n maglie calcio a poco prezzo \n \n \n

  14. liverpool tröja

    \n \n fodboldtrøjer \n \n \n \n \n maglie calcio a poco prezzo \n \n \n \n \n maglie calcio \n \n \n

  15. fußballtrikots kaufen

    \n \n billige fotballdrakter \n \n \n \n \n maglie calcio a poco prezzo \n \n \n \n \n fotbollströjor barn \n \n \n

  16. maglie calcio poco prezzo

    \n \n billige fodboldtrøjer \n \n \n \n \n fussball trikot \n \n \n \n \n maglie calcio a poco prezzo \n \n \n

  17. fotballdrakter

    \n \n fußballtrikots \n \n \n \n \n fotballdrakter \n \n \n \n \n maglie calcio a poco prezzo \n \n \n

  18. maglie calcio bambino

    \n \n fotballdrakter \n \n \n \n \n fußballtrikots kaufen \n \n \n \n \n billige fotballdrakter \n \n \n

  19. maglie calcio

    csuea2k8 6m3lv5g09h fotballdrakter joe34idnp rjc7g23n6b\n buj6sqx8t 9kvi1yn fußballtrikots e5182or vx08tdm1\n 6rlmi7kd n8ofs0g6 fußballtrikot kinder t1lf20wre 89aq0s\n

Leave a Reply

You must be logged in to post a comment.

Copyright © 2019 The Stated Truth