America’s debt burden will fuel the next crisis
The government, corporate, and private debt bubbles are going to pop sooner or later. And even if we manage to go a while without a correction, the debt will act as a drag on the economy. The article focuses on corporate and private debt.
I do agree with Rex on his point that the U.S. consumer won't be the sole cause of the next crisis. It will be a combination of household and corporate debt combined with underfunded pensions, which will collide in the next crisis.
However, there is a household debt problem which is hidden by the way governmental statistics are calculated.
Indebted To The American Dream
The idea of "maintaining a certain standard of living" has become a foundation in our society today.
Americans, in general, have come to believe they are "entitled" to a certain type of house, car, and general lifestyle which includes NOT just the basic necessities of living such as food, running water, and electricity, but also the latest mobile phone, computer, and high-speed internet connection. (Really, what would be the point of living if you didn't have access to Facebook every two minutes?)
But, like most economic data, you have to dig behind the numbers to reveal the true story.
So let's do that, shall we?
Every quarter the Federal Reserve Bank of New York releases its quarterly survey of the composition and balances of consumer debt. (Note that consumers are at record debt levels and roughly $1 trillion more than in 2008.)