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The underlying assumption is that the high consumption pre-crisis years is the natural state of the economy and the current situation is the outlier. I can't pr

The underlying assumption is that the high consumption pre-crisis years is the natural state of the economy and the current situation is the outlier. I can't pretend to know which is true, but I really doubt that boom years were natural, however convenient that narrative it.

toyg 13y ago
The truth is in-between: everything about economic states is cyclical.
- johnchristopher 13y ago
  But that doesn't explain anything. Are those states inevitable so we shouldn't try to anticipate or prevent them from happening or do we make them happen on purposes (read: does a minority manipulate the cycles to its benefits) ?
  - mseebach 13y ago
    They are inevitable, which means everybody should expect tham and plan for them. Basing risk calculations on the assumption that the price of an asset can never go down is a bad idea. Borrowing to cover non-essential operating expenses is a bad idea for both countries and individuals. If anyone could accurately and consistently predict these movements, they could and would be acted against for great profit. That is a simple market indicator that it is not possible. No, boom and bust cycles are not made on purpose. In related news, the Queen is not a lizard.
- waps 13y ago
  Really ? From the article : In the U.S., debt per adult soared 54 percent in the five years before the crisis. Then it plunged, down 12 percent in 4 1/2 years, although most of that resulted from people defaulting on loans. In the U.K., debt per adult fell a modest 2 percent, but it had jumped 59 percent before the crisis. - SHUNNING DEBT: In the five years before the crisis, household debt in the 10 countries jumped 34 percent, according to Credit Suisse. Then the financial crisis hit, and people slammed the brakes on borrowing. Debt per adult in the 10 countries fell 1 percent in the 4 1/2 years after 2007. Economists say debt hasn't fallen in sync like that since the end of World War II. The article calls this "plunged" "shunning", but it looks a lot more like a tiny hiccup to me.
mabhatter 13y ago
Or maybe we're all STILL PAYING OFF our 2008 debts... You know 35% effective APR and our houses all having negative equity 5 years latter will do that. The people writing this stuff live in a fantasy land where the rich took a 25% fall one year,but jumped right back on 10% gains the very next year... so why isn't EVERYBODY making plenty of money? They have absolutely no clue that WE took a 25% hit..but regular folk are lucky to have an aggressive 401k hit 7% in a year... Not to mention that the rich just RAISED THE PRICE of everything to get their money back faster.

toyg 13y ago

The truth is in-between: everything about economic states is cyclical.

johnchristopher 13y ago
But that doesn't explain anything. Are those states inevitable so we shouldn't try to anticipate or prevent them from happening or do we make them happen on purposes (read: does a minority manipulate the cycles to its benefits) ?
- mseebach 13y ago
  They are inevitable, which means everybody should expect tham and plan for them. Basing risk calculations on the assumption that the price of an asset can never go down is a bad idea. Borrowing to cover non-essential operating expenses is a bad idea for both countries and individuals. If anyone could accurately and consistently predict these movements, they could and would be acted against for great profit. That is a simple market indicator that it is not possible. No, boom and bust cycles are not made on purpose. In related news, the Queen is not a lizard.
waps 13y ago
Really ? From the article : In the U.S., debt per adult soared 54 percent in the five years before the crisis. Then it plunged, down 12 percent in 4 1/2 years, although most of that resulted from people defaulting on loans. In the U.K., debt per adult fell a modest 2 percent, but it had jumped 59 percent before the crisis. - SHUNNING DEBT: In the five years before the crisis, household debt in the 10 countries jumped 34 percent, according to Credit Suisse. Then the financial crisis hit, and people slammed the brakes on borrowing. Debt per adult in the 10 countries fell 1 percent in the 4 1/2 years after 2007. Economists say debt hasn't fallen in sync like that since the end of World War II. The article calls this "plunged" "shunning", but it looks a lot more like a tiny hiccup to me.

mabhatter 13y ago

Or maybe we're all STILL PAYING OFF our 2008 debts... You know 35% effective APR and our houses all having negative equity 5 years latter will do that. The people writing this stuff live in a fantasy land where the rich took a 25% fall one year,but jumped right back on 10% gains the very next year... so why isn't EVERYBODY making plenty of money? They have absolutely no clue that WE took a 25% hit..but regular folk are lucky to have an aggressive 401k hit 7% in a year... Not to mention that the rich just RAISED THE PRICE of everything to get their money back faster.