The institutional-debt firestorm and credit crisis has raged through world financial markets with a vengeance and no one knows when or how it will end. While the U.S. Treasury and legislators have announced a temporary plan to insure money-market funds and buy mortgage securities, it's unclear whether this will curb Wall Street's fears. Has consumer debt become the latest flash point?
As the economic reckoning continues, some 10 million Americans have filed for bankruptcy since 2000. One in seven families is dealing with a debt collector. In the past two years, more than 3.5 million have received foreclosure notices.
The bacchanal was enormous: Some $1.2 trillion in home equity was borrowed against from 2002 to 2007, says the public- policy group Demos in New York. That debt was created to largely cover other obligations such as credit-card bills, which total almost $1 trillion or $17,000 per household for those carrying a balance, according to the Federal Reserve Board.
We have become a nation consumed by debt. It seems like the only we are good at producing and exporting lately. Last week we wrote about the craziness that got us into this mess - the thought that buying and reselling the same properties for ever increasing amounts would help us. It makes as little sense as the ever changing government proposed bailout.
Trust the ones who drove us into the ditch to get us out? Isn't there a chance they will drive us off a cliff instead?