Yesterday’s report on consumer incomes, spending, and saving showed a sharp rise in the personal savings rate; it also showed a decline in nominal personal incomes, the third in a row, reflecting the weakening economy.Than he goes one
I don’t know who else has made this point, but it’s quite clear that we’re in serious paradox of thrift territory here. Or perhaps more accurately, we’re in a paradox of debt.
Consumers are pulling back because they’ve realized that they’re too far in debt. The economy is shrinking in large part because consumers are pulling back. And the result, almost surely, is to leave household balance sheets worse than ever. I can’t do this accurately until the Federal Reserve’s flow of funds data have been updated, but almost without question the ratio of household debt to personal income has been rising, not falling, as consumers try to save more.
Damnification in action.
Running up large debts in risk but doing nothing much riskier and if you do you would be dammed if you don’t you would be dammed. Than what you do? You might go through chapter 11? Somehow things are getting more complex then ever. But remember we are all in a same boat either sinking or swimming - same faith! Aren’t we so lucky?
