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Credit Orgy
By Charles Martin | February 27, 2009
A very good post on NPR today as to how we all got here. And you think they always go liberal…
An excerpt:
Twin Peaks
David Beim, a former banker who is now a professor at the Columbia Business School, has something to say for people who want to pin this whole thing on the banks.
He has a chart illustrating how much debt American citizens owe, how much we all owe — with our mortgages and credit cards — compared to the economy as a whole. For most of American history, that consumer debt level represented less than 50 percent of the total U.S. economy, as measured by gross domestic product.
And then …
“From 2000 to 2008, it’s almost a hockey stick. It just goes dramatically upward,” Beim says. “It hits 100 percent of GDP. That is to say, currently, consumers owe $13 trillion when GDP is $13 trillion. That is a ton.”
This has happened before. The chart shows two peaks when consumer debt levels equaled the GDP: One occurred in 2007, the other in 1929.
And that scares Beim…. MORE on the link.
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