In my last print piece, which our benevolent overlords have made available to the nonsubscribing public here, I try to count up the real national debt, i.e., all the money owed by the federal government, state and local governments, entitlement liabilities, government retiree pension obligations, etc. The number I came up with: about $130 trillion, which is to say, nine or ten times the “national debt” we usually talk about. (Over at the New York Post, Michael Tanner has similar questions on his mind.)
One thing I didn’t include: private debt. The household debt picture is pretty rough, too, and the news there is mixed: The good news is that Americans are actually reducing their household debt. The bad news is that they are not doing that by saving their pennies and paying down their bills, but by defaulting on their mortgages and credit cards.
There’s about $1 trillion in U.S. credit-card debt out there, much of it securitized. The charge-off rate (the portion of defaulted debt credit-card companies abandon as unrecoverable) doubled from 2006 to 2008, and just about doubled again from 2008 to 2010. Asset-backed securities based on credit-card debt are kind of an interesting creature, to my mind, anyway. Mortgage-backed securities ultimately have a house attached to them: an asset that can be repossessed, held, sold, etc. It’s not like credit-card companies can repossess that $200 bar bill you put on your Visa.
Given Uncle Sam’s precedent for relieving troubled banks of distressed assets, it’s not impossible that a lot of that private credit-card debt will end up as part of the public debt, on Washington’s books somewhere. I suppose debt is debt, but I’m going to feel a little better about debt financing an aircraft carrier than debt incurred by a late-night nacho run.