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As Economy Thrived Under Greenspan, So Did Debt
Washington Post ^ | Monday, January 23, 2006 | Nell Henderson

Posted on 01/23/2006 9:48:46 AM PST by Willie Green

Imbalances Make Federal Reserve Chairman's Legacy Unclear

Beverly Wilmore is bracing for the tuition bills about to start rolling in after her 19-year-old daughter starts at Towson University this week. But she's not too worried -- she figures she and her husband can borrow against their four-bedroom Gaithersburg home, which has appreciated from $250,000 when they bought it in 2000 to about $400,000 now.

And as the home's value rose, two years ago the Wilmores refinanced their mortgage, cutting their monthly home-loan payments by hundreds of dollars, she recalled.

Like many families who caught the housing boom, the Wilmores now have more debt than before they bought their home, but they also are wealthier. "I'm thankful for the low interest rate," said Wilmore, 42, a special-education teacher.

(Excerpt) Read more at washingtonpost.com ...


TOPICS: Business/Economy; Culture/Society; Editorial; Government
KEYWORDS: corporatism; debt; globalism; housing; thebusheconomy; willielogic
The Measure of Ben Bernanke
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Housing Experts Change Their Tune on Housing Bubble
Investors Retreat From Housing Market
Sellers chop asking prices as housing market slows (20% Cuts in Boston)
Most Overvalued Housing Markets
NYC mayor: housing market "dramatically" slowing

"And I sincerely believe, with you, that banking establishments are more dangerous than standing armies; and that the principle of spending money to be paid by posterity, under the name of funding, is but swindling futurity on a large scale."

-- Thomas Jefferson to John Taylor, May 28, 1816

"I am one of those who do not believe that a national debt is a national blessing, but rather a curse to a republic; inasmuch as it is calculated to raise around the administration a moneyed aristocracy dangerous to the liberties of the country."

-- President Andrew Jackson - (1824)


1 posted on 01/23/2006 9:48:47 AM PST by Willie Green
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To: Willie Green

The economy will get the inflation cure. Salaries matching the jumps required to pay off increased debt, is the unknown this time.


2 posted on 01/23/2006 9:59:39 AM PST by ex-snook (God of the Universe, God of Creation, God of Love, thank you for life.)
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To: Willie Green
U.S. household debt hit a record $11.4 trillion in last year's third quarter, which ended Sept. 30, after shooting up at the fastest rate since 1985, according to Fed data.

This is terrible. After subtracting out this debt, our household net worth is only $51 trillion. Up over $12 trillion since 2002.

Page 110 of 124

3 posted on 01/23/2006 9:59:53 AM PST by Toddsterpatriot (Why are protectionists so bad at math?)
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To: Toddsterpatriot
After subtracting out this debt, our household net worth is only $51 trillion. Up over $12 trillion since 2002.

And when the housing bubble pops net worth vanishes, leaving only debt intact.
That's when the bankers foreclose on the mortgages and seize ownership of properties at bargain basement prices.

4 posted on 01/23/2006 10:06:54 AM PST by Willie Green (Go Pat Go!!!)
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To: ex-snook
I agree with your general statement about inflation, but I don't think the increased debt load will drive it the way you seem to think it will. The basic premise of this article is that people have been able to take on more and more debt in recent years because the interest rates are so much lower now than they had been.

The simple truth is that a $400,000 mortgage at 6% is "more affordable" than a $300,000 mortgage at 9%. This -- more than anything else -- is what is driving the increased personal debt in the U.S.

5 posted on 01/23/2006 10:07:35 AM PST by Alberta's Child (Leave a message with the rain . . . you can find me where the wind blows.)
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To: Willie Green
And when the housing bubble pops net worth vanishes, leaving only debt intact.

Owners' equity in real estate is currently $10.9 trillion, 57.1% of real estate value.

6 posted on 01/23/2006 10:10:21 AM PST by Toddsterpatriot (Why are protectionists so bad at math?)
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To: Willie Green

Debt is what kept this economy rolling. Back in the day, if you didn't have the money, you did without. So a recession was felt more harshly. People kept saying "We aren't in a recession, see all the people out buying food", it's cause of the ole credit card.


7 posted on 01/23/2006 10:45:15 AM PST by sandbar (when)
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To: Willie Green

article mark.


8 posted on 01/23/2006 5:44:27 PM PST by Alia
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