Of course, the important follow-up question to ask is: "What sort of activities is all this debt financing?" If the answer is education or job training we may be able to get a good return. Yet the more likely result, that we are borrowing to finance present consumption means that there may not be the future resources to repay all this debt.
Wednesday, May 6, 2009
Do you Own the Shirt on your Back?
According to a report out of the UK, it looks like much of what Americans "own" is actually borrowed. The chart below is taken from the UK's Financial Services Authority Turner Report. Of course, the important follow-up question to ask is: "What sort of activities is all this debt financing?" If the answer is education or job training we may be able to get a good return. Yet the more likely result, that we are borrowing to finance present consumption means that there may not be the future resources to repay all this debt.
Of course, the important follow-up question to ask is: "What sort of activities is all this debt financing?" If the answer is education or job training we may be able to get a good return. Yet the more likely result, that we are borrowing to finance present consumption means that there may not be the future resources to repay all this debt.
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