Mish's Global Economic Trend Analysis |
Charts of the Day: Consumer Debt Components Since 2003 and Since the Start of the 2007 Recession Posted: 05 Dec 2012 01:08 PM PST In response to Deflationary Trends in Consumer Credit, reader John, owner of 37 Fast Food restaurants writes ... Hi MishImpact of Obamacare on Jobs Please see Mish Obamacare Mailbag: Expect More Part-Time Jobs and how it's influencing the unemployment rate] for a collection of reader emails, including one from John, regarding the impact of Obamacare on jobs. Impact of Recession on Consumer Debt John's idea on charting student loan balances is an interesting one. Doug Short at Advisor Perspectives does a phenomenal job with charts and Doug was kind enough to chart the comparison of various consumer debt ratios two ways, per my request. Household Debt Since 2003 click on either chart for sharper image Household Debt Since Start of 2007 Recession Fed data for the above charts is quarterly. As you can clearly see: mortgage debt, home equity debt, auto loans, credit cards, and other miscellaneous debt is all down since the start of the recession. Overall consumer debt is down 8.6% but student loans are up 74.6%. This is what happens when government purportedly attempts to find solutions to problems. The result is education costs have increased unabated, and millions of students have been turned into debt-slaves for life in a game of Student Debt Lotto. The deleveraging of consumer debt is by definition deflationary, as is turning students into debt slaves. Mike "Mish" Shedlock http://globaleconomicanalysis.blogspot.com |
Posted: 05 Dec 2012 09:55 AM PST The socialists and the Keynesians would have you believe that austerity is a bad thing, and that firing government workers when unemployment is already high is the wrong thing to do. Anyone believing those myths needs to consider Euro Countries (and the IMF) Can Learn from Latvia's Economic Success. In 2008–09, Latvia lost 24 percent of its GDP. It was heading toward a budget deficit of 19 percent of GDP in 2009 without a program of radical austerity.Latvia has a flat personal tax, low corporate tax, fired a third of public workers and the results speak for themselves: low inflation, high growth, and politicians re-elected. Contrast Greece and Spain with Latvia. The latter fired huge numbers of public workers in one fell swoop, while implementing work rule changes and not hiking taxes. Greece and Spain raised taxes while doing relatively little about work rule reforms, pension reforms, or making it easier to fire workers. Latvia rejected the IMF's recommendation for a progressive income tax, and as a result of the recovery, the IMF can no longer dictate Latvia policy. Iceland is also in recovery after telling the IMF and the rest of Europe where to go. The only mystery is why Latvia would want to join the eurozone giving up control down the road to a bunch of socialist nannycrats who will not like Latvia's low corporate tax structure or its non-progressive flat income tax. Mike "Mish" Shedlock http://globaleconomicanalysis.blogspot.com |
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