guido

U.S. Household Debt: A Frightening Picture

your correct in that the analysis is incomplete, there are numerous other forces at play, however, I don't believe consumer debt has ever reached 100% of GDP, total serious delinquencies (90 days or more past due) is twice the level of 2005, credit spreads for the financial sector is currently 400bps versus 75 bps as recently as December 2007 and between now any year end 2009 almost $900 billion of financial institutions debt matures. Overall reates may be low but there spreads are huge. Big price tag there, also when the fed acts on fannie and freddie the $30 billion held by US financial sector will require an additional writedown, further distruction of value. Energy costs are not going to stay low and the consumer can't carry the burden. Our largest industries housing, autos and airlines are all on the ropes. BTW JPMorgan Chase just announced that the are writing down GSE preferred positions. The American consumer has always been able to consume us throuigh downturns, they are not going to ba able to repeat that behavior.