Tag: debt

An interesting piece by Rebecca Wilder I saw at the Angry Bear economy blog really jumped out at me.  The nutshell is this:

The goods share of total consumption has been falling quite dramatically, while the service component surged. Therefore, it is more likely that the debt fueled consumption was going predominantly into the service component (paying service bills).

In Q2 2009, 25% of service spending went to health care – outpatient services (physician, drugs, dentist) or hospital and nursing home services – and 29% of service spending went to housing and utilities – rent, water, electricity, and trash. As such, over 50% of service consumption is more likely to remain stable, even rise faster, with the Boomers out there.

The chart is here:

Sorry about the left and right vertical axes… to get it to post, I had to shrink it.  Full blown chart is here.

Note that consumption of goods has dropped from just over 60% to just over 30% in the past 60 years, while spending on services has steadily increased from just under 40% to nearly 70%.  The two dataplots connected to the right hand axis, rent/housing and healthcare, show that health care has tripled as a fraction of spending during that period while housing costs have edged up slightly as a fraction of spending.

How does this tie in to debt?  Well, you probably already know the answer to that one, but allow me to belabor the point.

Quite a good article posted at www.CommonDreams.org that sums up my feelings about the state of our Country some 8 months after we had been promised “change” (and voted for it).

See: Hey, Did You Hear That Democrats Won The Election?”

Some excerpts:

I’m not shocked that he’s not FDR. But why is this guy carrying water for George Bush, covering up his worst crimes?

Why are his civil liberties positions so bad that one attorney described them as “the good old Bush-Cheney inherent presidential power theory” all over again?  

Why is he working so hard to make sure Wall Street sucks every drop of blood it possibly can out of the pale-white corpse of the American middle class, even while it ruins the global economy in yet another get-rich scam, then turns to the government for a bail-out when it all comes a cropper, all the while – and without a hint of irony – still loudly singing its effusive praises of Ayn Rand?

I might also add, why is he so personally heavily invested in the legal protection of Dick Cheney?

One of the most pernicious frames the Republican Party and Grover Norquist have ever placed on our nation is this idea that the rich should not be taxed at much higher levels than the rest of the nation. This frame is so well placed it has become nearly and article of faith for the nation if we some how put a significant amount of tax on those who can most afford it this punishes the whole nation. The Dog thinks this is flatly insane.

“Originally posted at Squarestate.net”

UPDATE:

So who says we are shouting down a whole or only talking to ourselves? Today the Dog got an e-mail from the Neil Cavuto show on Fox “Going out of” Business Network asking if he would like to be on the show to talk about raising taxes on the rich. After thinking it through the Dog has turned them down, why be a chump they can treat like a punching bag? If this were one of the Dog’s signature issues it would have been different, but since this was a one off essay, it is not worth outing the hound to look like a putz. Still we are getting attention on our humble blogs, so as Buhdy says “SHOUT LOUDER!”  

I’m not an economist and the only real numbers I crunch are my personal expenses and when bidding construction jobs putting together those costs and percentages which in these latter years of my life, preferring more to do the work, I have done very little of, except while doing the work to bring a better quality for hopefully a bit cheaper cost in material and professional skill.

Watching what is now taking place in banking and the dream new capitalist economy that’s been sold for a number of years isn’t really a big surprise to this common man, many were forecasting exactly what would happen if we followed the sales pitch.

It’s refreshing to see that some businesses are doing well in today’s economy.  Perhaps the most successful venture going today is the pawn shop.  From Peoria to Pasadena,  pawn shops are seeing a boom in clients.

Says Doug Robinson, a pawn shop owner in Pasadena,

We’ve been on a continuous uphill run for a number of months.  I don’t see anything that will stop it.

Worse even than the paycheck advance loans, a pawn shop loan typically involves an annual interest rate in excess of 50%.  Yes, that is fifty percent per year.  In Mississippi, the cap is 25% per month, which is 300% per year (if not compounded monthly).  

Given that credit card debt is often 18% or higher, it is incredibly sad to imagine the poor soul who pawns an object at 50% interest to pay that very same object off on the 18% credit card debt.  

(Crossposted at DailyKos.com)

Book review: Hudson, Michael.  Super Imperialism.

Second edition.  London: Pluto, 2003.

I thought that a discussion of Hudson’s book book would be pertinent in terms of recent discussions of indebtedness and in terms of Hudson’s role in the run-up to next year’s elections.  Michael Hudson’s site says he is “President of the Institute for the Study of Long-Term Economic Trends (ISLET), A Wall Street Financial Analyst, Distinguished Research Professor of Economics at the University of Missouri, Kansas City and author of Super Imperialism: The Economic Strategy of American Empire (1972 and 2003) and of The Myth of Aid (1971).

In 2007, Dr. Hudson has been appointed Chief Economic Policy Adviser for the Kucinich for President campaign and is writing a new tax policy for the United States.