US household debt
- Thread starter dealmaker
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therefore what is the chart missing?
Better question: When adjusted for inflation, why are tuition costs today in the US much greater than in the past?
I wonder why all the shitty countries are in the lower bottom section... Colombia, Greece, Ireland, Brazil, Russia, ...
The way I see it, the top section consists mainly of countries that have a free open market society... open capital markets, which give lower borrowing costs. Those borrowing costs compared to income/GDP should be the main factor when comparing... since it's the cost of owning a mortgaged house that matters vs the serviceability.
Cost vs Income, not just Liability vs Income
Of course cost is going to be an issue if rates are going to rise... but than again, you would think rates rise when economy is doing better and inflation picks up... causing income generation to go up.
Liz Ann Sonders IMO is taking things too often at face value... not much thought goes to the how/why... seen a tweet before which made me think the exact same thing.
The way I see it, the top section consists mainly of countries that have a free open market society... open capital markets, which give lower borrowing costs. Those borrowing costs compared to income/GDP should be the main factor when comparing... since it's the cost of owning a mortgaged house that matters vs the serviceability.
Cost vs Income, not just Liability vs Income
Of course cost is going to be an issue if rates are going to rise... but than again, you would think rates rise when economy is doing better and inflation picks up... causing income generation to go up.
Liz Ann Sonders IMO is taking things too often at face value... not much thought goes to the how/why... seen a tweet before which made me think the exact same thing.
In those countries it's not easy to get unsecured personal loan...
How many people in the Western countries have unsecured personal loans that really add up to a significant number? Most household debt is mortgage/secured...
Just had a quick search... In Australia 7% of household debt is non-secured in the form of personal debt/student loan/credit card... Mortgages are 56%, Investor debt 36.5% (which is mainly loans on investment properties...) so 'asset-backed' debt is almost 93%
In the USA, about 67% of household debt is mortgages... 10% is student loans.
I get that credit card debt is probably the most common form, but in size? I doubt that... Household debt in the West is about home-ownership, in the other countries it's personal loans.
The lower section countries have capital controls... likely most assets (housing etc) are owned by a smaller % of population... so they've kept it for years and years and gained significantly on inflation... not doing much maintenance on housing... those countries have less home-ownership I think...
While the West spends a decent amount on their own property, renovations etc... obviously adding up in costs/debt, but also improving standards and value.
In the non-West countries, my tendency is to think their debt consists mainly of unsecured personal and small business loans.
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