Still Digging

Yep, we're still digging. I know, all you here about is how the consumer is now saving and corporations are rapidly deleveraging. But the truth can once again be found in the Flow of Funds Report released yesterday.

We see that Total Non-financial debt of the United States increased to a record $34.7 trillion in Q4 of 2009 from a previously reported $34.5 trillion in Q3. And that the rate of debt accrual is increasing at a 1.6% annual rate. Therefore, after years of digging our financial black hole with a gargantuan sized backhoe, we are now just using a really big shovel. It is true that the consumer and corporate sectors are shedding debt. But the state and local governments are piling on debt at a 4.7% annual rate and the Federal government is piling on the red ink at a 12.6% annual rate!

We are not saving at all yet as a nation. The sad truth is that we continue to add to our level of debt, albeit at a slower pace. Of course, every dollar of debt is a promise to tax that same dollar sometime in the future. So Public debt is no better than private debt. And therefore, our over-leveraged condition has not even begun to heal.

Not only that but the Not only that but the Washington Post reported that there are 5 to 7 million mortgages that are 3 months or more behind on their payments that haven't gone into foreclosure yet. Still more deleveraging to go . Submitted by Greg (not verified) on Sun, 2010/03/14 - 5:18pm » reply |