Bill Murphy of GATA.org and LeMetropoleCafe.com discusses the economy and the gold and silver markets with Mike Maloney
Sunday, May 24, 2009
Saturday, May 23, 2009
Will Credit Card Debt Crush American Households?
Will Credit Card Debt Crush American Households? The chart of American credit card debt is not pretty.
However, we disagree with negative tone of many market pundits on the increasing amount of American credit card debt. In our view, increasing credit debt level is not as worrisome as long as the total household debt as % of total net-worth of US households is still small and manageable. It appears to be the case as of end of 2008:
- US Household assets as a whole: $65.7 trillion, unadjusted for inflation.
- US Household liabilities: $14.2 trillion.
- Net worth of US/American households (assets minus liability) was $51.5 trillion.
(Source: The Federal Reserve)
This means the total household liabilities (not just the credit card debt) as % of total net-worth of US households is still 27.5%...very reasonable still.
Hence, we argue that US households in general on aggregate are still able to absorb and withstand higher debt levels. This is a surprising fact but fortunately true.
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