The Financial Obligations Ratio Falls to its Lowest Level since 2001

Posted by Kendall Harmon

Check it out (the "total column").

Note: The household debt service ratio (DSR) is an estimate of the ratio of debt payments to disposable personal income. Debt payments consist of the estimated required payments on outstanding mortgage and consumer debt.

The financial obligations ratio (FOR) adds automobile lease payments, rental payments on tenant-occupied property, homeowners' insurance, and property tax payments to the debt service ratio.

The good news is it is moving in the right direction--KSH.

Filed under: * Economics, Politics • Economy • Consumer/consumer spending • Housing/Real Estate Market • Personal Finance • The Banking System/Sector • The Credit Freeze Crisis of Fall 2008/The Recession of 2007--

1 Comments
Posted December 22, 2009 at 5:40 pm [Printer Friendly] [Print w/ comments]



1. Bart Hall (Kansas, USA) wrote:

We have SO far to go ...

a)  Total government debt is about 150% of GDP
b)  Total household debt is about 100% of GDP
c)  Total corporate debt is about 325% of GDP

Those numbers do not include government debt guarantees, for example Fannie, Freddie, FHA, SBA, FDIC and who knows what all else. Nor do they include un-funded entitlements (Medicare, Social Security, new government health programs, etc.) which total at least another 400% of GDP, and which will translate into even more government debt.

All together our obligations—our debt—are far beyond ten times GDP. The only reason the economy appears to survive at present is because of rock-bottom interest rates. If rates for the federal government went to 4% on aggregate—that is the long-term average, and people who lend money to the USA will soon insist on such rates—federal government interest payments would exceed total anticipated federal revenue for 2010.

The moment we start borrowing to make interest payments ... It. Is. Over.

“The difference between a normal business-cycle recession and an extreme business cycle fluctuation—a depression—is OVER - INDEBTEDNESS.”  Irving Fisher, 1933

December 22, 8:35 pm | [comment link]
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