# Too much debt



## [t..o..m] (10 October 2008)

Buying too much of what we can't afford, maybe we might learn from this.... hopefully.

Notice USA, UK, and Australia have been the worst offenders since 2000


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## SM Junkie (10 October 2008)

> Buying too much of what we can't afford, maybe we might learn from this.... hopefully.
> 
> Notice USA, UK, and Australia have been the worst offenders since 2000




Crisis is the best time for change to occur. We needed something like this to make us change our ways and it seems to be occurring. Consumer spending in Aus seems to be down and the Americans last month paid more of their credit cards than they debited.  Good signs in my book as individuals start to take responsibility for their own financial troubles. 

But this crisis needs to hurt average Joe for a bit longer yet in order to develop new habits and result in a sustainable improvement in their behaviour towards debt.  

I wonder how things will look on the other end of this?


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## Page (18 October 2008)

When a person faces crises they start financial planning for future. But crises like we are are watching currently has horrified the whole universe. No one knows when the stock market is going to have a recovery. Really a bad time for stock market history.


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## pacestick (18 October 2008)

neither a lender nor a borrower be

 william shakespear or at least a character he created


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## theasxgorilla (18 October 2008)

[t..o..m] said:


> Notice USA, UK, and Australia have been the worst offenders since 2000




According to that graph at least...any chance you can throw a few more countries up there??


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## Glen48 (18 October 2008)

Watching the News tonight I could not believe people would consider buying  a property in this climate yet they all mentioned the FHOS I guess we will spend 21K on a house which will go down and then the ATO will spend more on some bailing them out or rent assistance.
Still bad news in USA and bad news here with people starting to walk away form their homes.
If it was any thing else you could sue the RE agent for faulty goods I dd see one agent saying people are getting out of the Share market in to RE because it  is easier to control  wonder how they put a stop loss on a house?


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## roland (18 October 2008)

I don't have any debt and only was so once around 30 years ago with a car loan for a 2nd hand car.

Not having any debt also means I don;t have a house. I did actually get very close to paying cash for a house just before the stock market downslide killed that dream.

Not having debt in good times seems like missing out on having stuff, in bad times it's a blessing - although still don;t have stuff


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## tech/a (19 October 2008)

Consumer debt isn't the crux of the problem more so a consequence of governments needing to stimulate consumerism.

The real and all consuming problem is this.
http://www.globalresearch.ca/index.php?context=va&aid=8634


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## brettc4 (19 October 2008)

I've never been a big fan of debt. Mainly due to the way I was brought up being told to only buy stuff when you can afford it.  

I did have a home loan though, but paid that off in 5 years because debt was bad.  Since that time I have been revising my view.  I do now have a small margin loan, and although it hasn't turned out for the best this past year, my investments are still and have always been long term.

And although the current crisis isn't primarily related to household expenditure, I have no doubt that people need to change their habits or they are always going to be behind the 8-ball, and the government should be helping them to do this, to lessen the cost to the government down the line.

Brett


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## kenny (19 October 2008)

As much as I don't like Big-Brother activity, one of the big causes of the problems we're experiencing is the lack of regulatory oversight and action.

Like tech's excellent link mentions this inaction may be a conscious decision to "let the free markets sort it out" or in other cases just not using the tools they did have at hand.

I doubt consumer debt will change in any long lasting fashion. We are all too enamored of Stuff. With the amazing progress and development of new Stuff that we never knew we needed, we are all likely to keep spending after the short term shocks.

Cheers,

Kenny


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## Prospector (19 October 2008)

The only debt I have is for an Investment property, so I guess it is good debt.  But even that doesnt feel great right now.


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## Glen48 (19 October 2008)

Sorry there is no such thing as an "Investment " property it is just a saying like 
No OZ Child will live in poverty. Best thing is to put it on the market and take the first offer.


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## Calliope (19 October 2008)

Debt is good. Saving is bad. That is now official govt policy. Why else would they throw money at people who can't save the deposit on a house to encourage them to buy a house they will never be able to service the mortgage on.:headshake


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## Julia (19 October 2008)

Calliope said:


> Debt is good. Saving is bad. That is now official govt policy. Why else would they throw money at people who can't save the deposit on a house to encourage them to buy a house they will never be able to service the mortgage on.:headshake




I'm glad to see you expressing this.   I've been thinking the same thing and searching for some alternative reasoning.
And, given we are almost certainly facing increasing unemployment, how much more likely it has to be that people will have committed themselves to mortgage repayments they can never hope to meet if unemployed.

I just don't get it.   Haven't we just spent several years bemoaning the housing bubble?   Now that prices look like becoming more affordable, we are going to artificially prop them up!

Probably, Robots, you will have some excellent explanation for why this is all good.

Thank you.


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## aleckara (20 October 2008)

Julia said:


> I'm glad to see you expressing this.   I've been thinking the same thing and searching for some alternative reasoning.
> And, given we are almost certainly facing increasing unemployment, how much more likely it has to be that people will have committed themselves to mortgage repayments they can never hope to meet if unemployed.
> 
> I just don't get it.   Haven't we just spent several years bemoaning the housing bubble?   Now that prices look like becoming more affordable, we are going to artificially prop them up!
> ...




Debt is encouraged as it adds to the level of spending in the economy and therefore income in some sectors. It also is encouraged as this spending generates jobs and perceived economic wellbeing. The government does not want you to save, they want you to create jobs and economic activity. Saving reduces this.

Another fact is that if no one owed anyone anything then no one would work - or work nearly as much. Money is debt; money itself is an instrument of what other people owe you measured in a easy way. Without debt there would be no money as they say. I see it money as the debt society owes you printed as a nice security/bill.

The more debt you have the more economic activity you have as people work to pay off their interest bills. There is a financial leash of debt to keep people working and make the economy turn so to speak. 

No politican wants to pop bubbles; no one wants to be the bringer of pain. If everyone in the nation wants a continuous growth of money and wealth then debt is required to 'create' that money. Even if the wealth is entirely false and we are just more indebted to each other than ever before.

This is my limited understanding of it anyway. Too much debt = too much money.


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## Glen48 (20 October 2008)

A bank is just a supermarket were you buy money.. we need debt to keep the Country running so If every one doesn't spend their handout the Feds are in trouble.
The only way this will sort its self out is to let every thing collapse and start again and in 60 yrs time do it all over again. 
Super and share will have to go down as well when you see BHP at $5.00 you know we are close to the bottom then in 10 yrs time we will start go up again.


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## fimmwolf (20 October 2008)

SMH article:  Greed is a deadly sin for the economy 

http://www.smh.com.au/articles/2008/10/19/1224351052160.html




> On July 30 Hans Redeker, head of foreign exchange strategy at BNP Paribas, Europe's biggest investment bank, predicted: "The Aussie is going down, big time." Now Redeker has issued another warning to Australia. We'll get to that. But first, let's look at his track record.
> 
> December 2006: Redeker predicted a sharp recession in the United States, saying the condition of its housing market was worse than the experts were stating and the flow-on effects would be much worse than predicted. That was almost two years ago. He was right.
> 
> ...


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