Fenderputty
Banned
Yeah I've read about this. It's just hard to qualify. Though if that bubble pops ...
-
Hey, guest user. Hope you're enjoying NeoGAF! Have you considered registering for an account? Come join us and add your take to the daily discourse.
US Household Debt Now Higher than 2008 (Height of Credit Bubble)
- Thread starter Syriel
- Start date
Yeah I've read about this. It's just hard to qualify. Though if that bubble pops ...
Fenderputty
Banned
2008 is the only reason I own. I get the sentiment
Clockwork
Member
I was speaking in regards to student loans so you can get right the hell out of here with that bullshit.
A student loan is merely a means to pay tuition. It does not guarantee academic or financial success.
The fact that some believe (after the fact) that they should not have to repay their debt because things did not work the way they expected (or simply did not take the time to understand what taking on that kind of debt would mean) is pretty ludicrous.
Ron Mexico
Member
I'm sure it goes without saying, but I'm a staunch opponent of "too big to fail" so we're on the same page, although I'm not sure how exactly how the logistics of that bailout would look.
Ironically, all the protections that were put into place to prevent another "too big to fail" catastrophe, just made the already too big to fail institutions bigger.
I don't think student loans will ever threaten the enconomy like the subprime mortgages did because so many loans and institutions providing loans are either explicitly or implicitly backed by the government; some loans are even directly from the government. The subprime mortgages were a completely different situation.
That doesn't mean outstanding loan debt isn't a huge problem ..... more that it's a different kind of problem that continues to manifest differently than an a huge apoloclyptic financial crisis that gets everyone's attention. It's more like a terminal disease than something like a heat attack.
That doesn't mean outstanding loan debt isn't a huge problem ..... more that it's a different kind of problem that continues to manifest differently than an a huge apoloclyptic financial crisis that gets everyone's attention. It's more like a terminal disease than something like a heat attack.
Wouldn't the government just absorb the debt as the loans are federally guaranteed?
Ron Mexico
Member
Absorbing the debt still means it has to be offset somewhere. I'm not an economist, but the super simple answer is it could give rise to more inflation, further driving up rates and exacerbating all the other issues.
Rodney McKay
Member
"POP POP!"
-Magnitude
-Magnitude
Hale-XF11
Member
It's also the reason I lost nearly half the value of my home and still haven't recovered since so many homes foreclosed around mine and then sold for dirt cheap.
Clockwork
Member
It's also the reason I lost nearly half the value of my home and still haven't recovered since so many homes foreclosed around mine and then sold for dirt cheap.
Recovered from what? Did you plan on selling your house? If not what makes things different from before 2008 to now?
Or are you one of those "a house is an investment" guys? As if some return has to be made on it.
Muppet of a Man
Member
We, as a country, seem to be cycling in and out of these debt leveraging crises more and more frequently. It begs the question, why the fuck are we doing this? The biggest contributors to this debt, other than real estate, are student loan debt and healthcare expenses. Paying for those things is a systemic issue at this point. Both are required for a fully functional and well equipped, competitive workforce. So, we are going to have to move to universal/single-payer healthcare and highly subsidized or free tuition for higher education at some point or risk falling further and further behind in terms of a competitive workforce.
Ron Mexico
Member
Don't want to put words in his mouth, but a loss of equity post-2008 can of course impact refinances and the like as the LTV will change and so could the rates.
For me, a home equity on my old townhouse was a godsend in helping to finance the improvements that then made it easier for me to sell. But in order to obtain that home equity, I needed the equity to be there in the first place.
So totally an investment? No. I am living there too, but I still absolutely pay attention to the value of my house.
Roland_Gunner
Member
Student load debt is a problem but this article is referring to debt in absolute dollars amounts which is terrible. Household debt is actually quite low right now because millennials are have postponed things like mortgages:
HawksWinStanley
Member
I will be doing everything in my power to make sure my daughter gets through college without student loan debt. My parents did it for me and it was the greatest thing they've ever done for me since giving me life.
there is substantial academic research to cosign the fact that financial success for the typical adult is tied to a post secondary degree from a 4 year institution. Coupled with the fact that a significant part of these loans are signed by 17/18 year olds with no comprehension of financial literacy, with adult parents who either (1) have just as little or just marginally more financial literacy, or (2) Come from a time where college tuition was not grossly inflated and matched wages
Nobody is advocating that you shouldn't have to pay back money your borrowed as an abstract concept. But forcing teenagers into thousands of dollars of debt because their lifetime earning capacity will be severely depressed otherwise and then refusing to fix an economic system where inflation grows but wages are stagnant.....on top of making student loans follow you around for life like a bad habit. Yes, shame on these people for not wanting to pay back money they borrowed. It's literally that simple.
Your comment was reductivist bullshit so I replied in kind. If you don't have a critique of rising tuition costs, stagnant middle class wages, and cost-of-living being out of control to go along with your "people should pay back money they borrow" you should keep it to yourself.
Hale-XF11
Member
I bought it in 2007 as a starter home. I've been stuck with it ever since because it just won't sell without me taking a loss on it, which I can't afford to do since I now live paycheck to paycheck. I've also been unable to afford doing any upgrades, so it needs lots of repairs. :/
Nah, California's prices are high because California does not build housing.
IchigoSharingan
Member
Home ownership already isn't a realistic option
This is a big part of it. Tuition is no $30k+ at every school.
There seems to be a draw for a "name" school, but it doesn't mean the value is there.
The other option, as we're starting to see some experimentation with, is the idea that school is investing in the students (rather than the other way around) and instead of paying for tuition up front and with loans, students will commit a percentage of income for a set number of years after graduation.
That kind of setup could incentivize schools to focus on programs that are going to produce easily hire-able graduates because the more $$$ the graduates make under that scheme, the more the school makes.
"Worthless" degrees would hurt the schools more than the students under that model.
Unknown Soldier
Member
They build lots of housing. The problem is no one wants to build up, only out.
Randolph Freelander
Member
I'll just quote myself from the thread 3 months ago when debt numbers were getting "close."
RoyaleDuke
Banned
We never left the depression.
Yes, depression recession is a stupid fucking coin phrase for idiots who don't want to see the truth.
Much like this entire presidency and its base.
Yes, depression recession is a stupid fucking coin phrase for idiots who don't want to see the truth.
Much like this entire presidency and its base.
IchigoSharingan
Member
$1.3 trillion isn't ludicrous. It's systemic.
Roland_Gunner
Member
Things aren't great right now but we're clearly out of the recession. There are nearly five million more full time jobs now than when it started.
The Albatross
Member
It is not an existential threat to households and the economy, Mr. Zandi said. It is an area where there is some stress.
The collapse of the credit bubble in 2008 was caused by:
- Failure of financial markets caused in-part by terribly leveraged banks
- Which drove collapse in hiring and wages
- Which drove defaults on lending
- Which drove runs on insurance
- Which left banks with no capital
- Which collapsed the economy
Of course this is the result of 10 years of easy lending. When the Fed makes money free, banks, businesses, and consumers take out more loans. Free or near-free money is what drove the US out of the recession, but this is the counter to that, poor consumer loan leverage. However, wages in the last two quarters have started catching up to very low unemployment, and the Fed rose rates 2 quarters ago, which increases savings and decreases easy money, which helps balance out leverage.
The collapse of the credit bubble in 2008 was caused by:
- Failure of financial markets caused in-part by terribly leveraged banks
- Which drove collapse in hiring and wages
- Which drove defaults on lending
- Which drove runs on insurance
- Which left banks with no capital
- Which collapsed the economy
Of course this is the result of 10 years of easy lending. When the Fed makes money free, banks, businesses, and consumers take out more loans. Free or near-free money is what drove the US out of the recession, but this is the counter to that, poor consumer loan leverage. However, wages in the last two quarters have started catching up to very low unemployment, and the Fed rose rates 2 quarters ago, which increases savings and decreases easy money, which helps balance out leverage.
Except you missed the part where a person can irresponsibly rack up a ridiculous amount of unsecured credit card debt, declare bankruptcy and be in the clear. Nothing will be seized.
Ron Mexico
Member
Student load debt is a problem but this article is referring to debt in absolute dollars amounts which is terrible. Household debt is actually quite low right now because millennials are have postponed things like mortgages:
I worked at a tiny little branch of BoA from '02-'05 and was personally booking a shade over a million dollars a week for a good stretch there (mind you I had no bearing on the underwriting-- I took the app, they signed the docs, I moved on). Even as a total novice to the industry, something felt wrong.
That chart about sums it up.
Which is why credit cards are typically at rates that far exceed even student loans. The lenders are pricing in the risk knowing they have nothing in the event of bankruptcy. Credit cards are their own problem, but I wouldn't use them as any real justification of not charging off student loans. Apples and oranges (at least under current rules and regs).