Consumer debt is at an all-time high. Should banks be worried? Should America?

“Savings in this country is invisible,”

 

 

The debt based economy has everything to do with crony capitalism. Let’s not forget, the winners in the debt game are typically the connected who are sometimes indemnified by the state. The little guy hangs. That’s what happened in 2008.

(From American Banker)

The crisis had immense economic and political consequences over the following decade. It helped fuel the rise of the Tea Party, and later, both Trumpism and the anti-corporate left. It led to new regulations that transformed banking into a safer, far more boring industry. And it wreaked havoc in tens of millions of American lives. Foreclosures became an epidemic. College graduates were forced to move into their parents’ basements. Aging workers had their retirement plans upended.

But 10 years later, what’s remarkable is how little the financial crisis changed Americans’ relationship to debt and savings. We still borrow more and save far less than prudence would dictate.

U.S. household debt, which declined between 2008 and 2013, has rebounded sharply. By the first quarter of 2018, it was at an all-time high of $13.2 trillion. The composition of our debt has changed, and we’ve been better able to manage our obligations, thanks in substantial part to an extended period of low interest rates. But the crisis did not teach us a lesson about the perils of borrowing too much.

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