Posted on 09/09/2010 8:05:46 AM PDT by blam
Here's The #1 Threat To The Economy At Least Until 2012
Joe Weisenthal
Sep. 9, 2010, 6:30 AM
Image: Deutsche Bank
Deleveraging.
You've heard this term a lot because it's a huge deal, and the fact that households are still deeply in debt (though not as bad as they were two years ago) is a major drag on consumer spending.
In a new report from Deutsche Bank's Peter Hooper and Torsten Slok, this issue is examined more deeply -- how much deleveraging has been done, why it's ongoing, and how much more there is.
Their conclusion -- yes, we've already made substantial progress, but we'll be doing a lot more, through at least 2012.
Click here to see the problem >
[snip]
(Excerpt) Read more at businessinsider.com ...
I was looking for a picture, not a graph.
deleveraging - paying off debt.
problem is that when debt gets paid off, the money supply goes down.
L
Yep. I expected a picture of Maximum Leader, perhaps in appropriate garb.
You’d be correct and then Pelosi & Reid and then anything that is labeled Liberal.
Yeah, ditto that.
Mine, too.
Correct. It’s interesting that when people are paying down debt, they aren’t spending as much money. As a result, the businesses they are not spending money with are having a hard time paying down their debt. And so it goes.....
Yep. That’s the Number Two threat. The Number One threat is Barack Hussein Obama.
“Yep. That’s the Number Two threat. The Number One threat is Barack Hussein Obama.”
AMEN!
but it’s usually temporary
Consumer spending is NOT the answer to returning health to the economy. Savings is. We got this way because of horrendous on balance negative savings in the economy. Spending wildly will only make things worse. Increased production creates increased demand and the incomes that represent that demand. Without savings, production must decline. It can be ramped up artificially by continued profligate borrowing but that only ensures future steeper longer decline. These people look in the mirror and see signs of increasing ill health and their answer is to keep eating the poison that is ruining them and to apply ever more makeup to make it look better. When the stroke hits the makeup won’t cover much any more.
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