Post: #1

http://wolfstreet.com/2017/01/22/these-a...0th-place/

Quote:Americans have been on a borrowing binge. To buy their favorite cars and trucks, they’ve loaded up on $1.14 trillion in auto loans. Young and not so young Americans are mortgaging their future with student loans that now amount to $1.28 trillion. Credit card and other debts are at $1.12 trillion. And mortgage debt stands at $8.82 trillion.

So, total household debt was $12.35 trillion, according to the New York Fed’s Household Debt and Credit Report for the third quarter 2016. That’s a massive amount of debt. Many consumers are struggling with it. Student loans are seeing enormous default rates, and repayment rates are far worse than previously disclosed. And “debt slaves” has become a term in the financial vernacular.

But it isn’t nearly enough debt…

[more]

Quote:And here’s some inevitable food for a terrifying thought: The countries with highly indebted households, so the top of the list, are mostly countries were central-bank policy rates are very low or even negative, and where mortgage rates are super low. What happens to those housing markets, the households, the banks, and the overall economies when interest rates rise even a little and that whole equation of perennially ballooning debt falls apart? We already know what happens.

The other options is a big bout of inflation to help wipe out the purchasing power and burden of that debt. But that debt is a huge asset class with very low returns as it is, and if a big bout of inflation sets in, the holders of these assets – banks, pension funds, insurance companies, and other institutional investors – are going to take a licking, as are the hapless people (which is nearly everyone) that counted on the purchasing power of those cash flows. Those are the two options out of this debt nirvana.

Post: #2

Interesting. I see that Scandinavia is above the USA. I wonder if there is something about large social welfare programs that encourages borrowing.

Post: #3

(01-24-2017 03:37 PM)RexImperator Wrote:  Interesting. I see that Scandinavia is above the USA. I wonder if there is something about large social welfare programs that encourages borrowing.

Borrowing is based on a sentiment that I can leverage up my income and still feel able to pay my bills. Americans can do this because the rest of the world pays for their consumption because of the reserve standard and that commodities are priced in dollars (this comes unstuck when people question the dollar reserve standard, or want commodities priced in something other than dollars). I could go on a rant about how Germans use cash for everything and are very debt averse, explains position #24. German for money is gold after all.

PS I wouldn't buy gold before it retests $1050, then see what the general consensus is then as the smart money is in dollars right now because of the feel good factor from the election. The dollar index is doing well holding around 100.

Mega deflationists like Harry Dent are predicting $700 gold. Inflation is coming, but will it cause stagflation? I like Harry's commentary on how demographics are an economic predicting tool. Below replacement births forecast an economic contraction because there's less demand for consumer goods. New humans are inflationary, old humans deflationary.

Post: #4

Not surprised to see Australia up there.

Our housing market is beyond retarded. The banks have got a total squirrel grip on our politicians from the PM down to the councils.

Post: #5

The biggest shocker for me is Switzerland. I have always wanted to believe they were self-reliant and responsible.

Post: #6

(01-25-2017 01:25 AM)puckerman Wrote:  The biggest shocker for me is Switzerland. I have always wanted to believe they were self-reliant and responsible.

Nah, not surprise, the Swiss are known for their big banks.

Big Banks = Big Debt

Banks got to get paid, they only get paid in interest

The equation has to work some how

My biggest surprise is Canada, a country with a tremendous wealth of oil and natural resource, with a very small population. But word on the street, the banks have control of the real estate market in Canada, its pushing fiat money into the market to raise home prices, than blame the Chinese for the raise in real estate, plus Trudeau love for an influx of uneducated immigrants who will need assistance from the govt = more debt.

Post: #7

(01-25-2017 01:30 AM)HOD Wrote:  My biggest surprise is Canada, a country with a tremendous wealth of oil and natural resource, with a very small population. But word on the street, the banks have control of the real estate market in Canada, its pushing fiat money into the market to raise home prices, than blame the Chinese for the raise in real estate, plus Trudeau love for an influx of uneducated immigrants who will need assistance from the govt = more debt.

You have no idea the extent of it in Canada. East Indians dominate the real estate market, not Chinese. They keep their heads down so it isn't so obvious to civilians. Canadian banks have special lending rules for Indians; easier credit, better loan terms.

Post: #8

(01-25-2017 02:40 AM)TheMost Wrote:  

(01-25-2017 01:30 AM)HOD Wrote:  My biggest surprise is Canada, a country with a tremendous wealth of oil and natural resource, with a very small population. But word on the street, the banks have control of the real estate market in Canada, its pushing fiat money into the market to raise home prices, than blame the Chinese for the raise in real estate, plus Trudeau love for an influx of uneducated immigrants who will need assistance from the govt = more debt.

You have no idea the extent of it in Canada. East Indians dominate the real estate market, not Chinese. They keep their heads down so it isn't so obvious to civilians. Canadian banks have special lending rules for Indians; easier credit, better loan terms.

I said blame the Chinese, please re-read, " than blame the Chinese for the raise in real estate"

They are the scapegoats.

Post: #9

USA is still one of the more productive nations. Debt grows but outputs remain high so the ability to keep the game going continues on.

Scandinavian nations have high productivity with high taxes with large debt burdens to borrow against to put towards the welfare state. They get the .new back through slaving away the populating and taking away most thier money. Plus thesee places do have lots of leverage in various debt assets via the State. If Norway sinks a ton of debt into oil system upgrades and the people collectively *own* that debt it is going to skew national nunbers even though that debt is healthy and very leveraged to promote growth.

The UK has no real economy anymore aside from immigration and debt.

South Korea has very high productivity with a slave workforce just line the USA.

The worrying signs on the list are Canada and Australia which both underperform economically and have low productivity. Both economies simply just perpetuate household wealth growth largely via debt a few housing as the economy can't deliver wealth growth. This is why both Canada and Australia have the two largest property bubbles on earth with nothing close in comparison. What is going on in Sydney and Vancouver has not been seen in modern history. Vancouver has no money or economic output that measures up to its size yet has housing costs that rival Hong Kong.

Canada is the worse of the bunch of Canadian take on more debt per capita then anyone else on the globe. The Canada economic story is a sad tale as in previous decades we were on pace to have a higher GDP to population output than Switzerland. Canada was supposed to be the most wealthy nation on earth even with our heavy socialist leans. That all went to he'll in 70s though when we got taken over by the banking vultures and the Queen maintained her stronghold on ownership of all or resources after we were granted full autonomous powers from the UK.

Post: #10

(01-24-2017 03:37 PM)RexImperator Wrote:  Interesting. I see that Scandinavia is above the USA. I wonder if there is something about large social welfare programs that encourages borrowing.

There's a far easier explanation, interest rates in Scandinavia have been extremely low for almost half a decade. I just locked my mortgage for 3 years on 1.22%.

Post: #11

(01-25-2017 05:11 AM)HOD Wrote:  I said blame the Chinese, please re-read, " than blame the Chinese for the raise in real estate"

They are the scapegoats.

East Indians are being built up and positioned as the new Jews. Chinese are smart enough to avoid most scapegoating; people don't really care about a few rich Chinese buying mansions. People care about not being able to buy even a beginner house for themselves, without a 30 year mortgage.

Post: #12

(01-25-2017 04:30 PM)TheMost Wrote:  

(01-25-2017 05:11 AM)HOD Wrote:  I said blame the Chinese, please re-read, " than blame the Chinese for the raise in real estate"

They are the scapegoats.

East Indians are being built up and positioned as the new Jews. Chinese are smart enough to avoid most scapegoating; people don't really care about a few rich Chinese buying mansions. People care about not being able to buy even a beginner house for themselves, without a 30 year mortgage.

I don't think its an East Indian issue, its more of a bank thing.

Banks like to create debt and debt slaves via the loans.

Regardless who is buying it, it's pure economics, I'm very sure if British/Australian dudes have a chance at buying Canadian Real Estate they will go at it. Hell I'm interested in it.

Post: #13

No surprise Australia is up there top three.

Housing went from 4 times annual salary to 10 times. Some huge housing debts out there.

Post: #14

Quote:There's a far easier explanation, interest rates in Scandinavia have been extremely low for almost half a decade.

Aha. So this article gives an incomplete picture without adjusting each debt burden for the interest rates in that country.

Post: #15

(01-26-2017 06:27 AM)RexImperator Wrote:  

Quote:There's a far easier explanation, interest rates in Scandinavia have been extremely low for almost half a decade.

Aha. So this article gives an incomplete picture without adjusting each debt burden for the interest rates in that country.

National debts can be inflated away/rolled over forever since nobody can compete with the central banks ability to create new money. The problem is personal/household debt and since a large chunk of the global economy is geared to consumer spending, on credit, the picture this whole article is painting is a slowdown.

Most countries that could leverage up spending on credit have done so already. I don't see incomes in the West suddenly increasing since all of the gains in productivity goes to the capital owning class. This isn't some anti-capitalist rant either; people just need a greater slice of the pie. Many college graduates in America dream of just getting back to zero, rather than aspire to being millionaires.

Post: #16

The table would be more meaningful if it excluded mortgage debt. My total debt is over 200% of household income, all in a house which is worth about 30% more than what I owe. Total non-mortgage debt: 0. Mortgage debt does entail risk and brings a lack of flexibility, but it should not be lumped in to the same category as consumer debt.

Post: #17

@TheMost, can you expand on your views?