In 1959, debt made up 58.8% of a typical household's disposable income. In 2007, the figure jumped to 141.3%. Mortgage debt (103.3% in 2007) was 37.1% in 1959; consumer credit went from 16.3% ('59) to 25.1% ('07). Particularly disturbing, when one considers the recent Commerce Department report that consumers' disposable income has suffered its worst recorded decline.
Disposing of Income That We Don't Have
November 6, 2008We're All in This Together
October 29, 2008A glance at the year-to-date percentage change for major international stock indexes is a stark lesson in global economics. Only Caracas (Venezuela) showed a single-digit YTD loss this afternoon; losses of 30% to 50% were quite common, with RTS (Russia) off an astounding 74.9%.
As of May, Russia had 87 billionaires, second only to the US. At least half of them probably will lose their billionaire status in '09. In the past five months, Russia's top 25 high net worth individuals have seen something on the order of $230 billion fly the coop. A bizarre offshoot of this is that many magnates and oligarchs have taken to spending most of their time on their yachts; whenever they stroll about on shore, will angry crowds of shareholders, pensioners, and unemployed workers show up to pelt them with rotting fish and drive them aboard again?
Lethal Plasticizing
October 24, 2008Amidst a business credit drought, more small businesses are relying on credit cards for everything from capital investment to putting gas in the delivery van. Using personal credit cards for these purposes is a bad idea. But business owners may not realize that even company credit cards are personally guaranteed--late payments on such a card could affect a business owner's personal credit score. A business credit card also has fewer consumer protections than a personal credit card.
As small-business cards have pretty thoroughly replaced lines of credit, company owners have become painfully aware of revolving balances that grow as interest rates rise and of the fact that lenders are quite capable of raising rates and reducing credit limits--at any time and for any reason.
A more sensible alternative might be a credit union business loan. Credit unions have not been exposed to the same losses as other financial institutions, enabling them to up their business lending by 36% in the first six months of this year.
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