Newspaper article THE JOURNAL RECORD

Enormous Debt Is Struggling Economy's Biggest Burden

Newspaper article THE JOURNAL RECORD

Enormous Debt Is Struggling Economy's Biggest Burden

Article excerpt


Americans really are up to their necks in debt, and more people than ever before are sinking even deeper toward financial suffocation and bankruptcy.

Americans owe money to banks, finance companies, credit unions, pension funds, retailers, gasoline companies, foreigners. They owe on cars, homes, farms and their very lives, the latter by borrowing on insurance policies.

They even owe money to future generations by allowing government to run up debts they can never repay, and that will be passed on to those not yet born. Sadly, much of the money was for frivolous rather than meaningful items.

Americans owe money personally and institutionally, the former through such means as credit cards and the latter through debts run up by federal, state and local governments, and by companies in which they hold stocks or bonds.

It is a crush of bad loans - to Third World countries, real estate developers and big-time thieves - that underlies the demise of financial institutions, such as commercial banks, savings banks and thrifts.

It is this debt in all its forms that compels those who peek into the economy's future to turn their heads instead. It is what forces economists seeking a way out to give up and hope instead that we can muddle through. Debt is the economy's biggest burden as it tries to ascend from recession.

Home mortgages insured or guaranteed by the Federal Housing Administration and the Veterans Administration now total about $60 billion. Commercial bank credit is more than $2.6 trillion.

While much of that debt is very sound, used to finance housing and profitable commercial enterprises, an unknown percentage won't be repaid, and that means everyone will pay - in higher borrowing rates or perhaps in higher taxes or in even more government debt.

There also is more than $700 billion of consumer installment credit on the books, and a good deal of that also won't be repaid. …

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