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So You Want Debt Relief?

by Kevin D. Williamson

Let’s stop lending money to OWS

College loans are the big greasy grievance enchilada down at Zuccotti Park, but there’s other debt, too. One young woman was carrying a placard complaining of the $40,000 she owed to her mortgage lender. If I had to guess, I’d have put her at about 27 years old — not a bad age to be $40,000 away from owning a home free and clear, but presumably there are others in worse shape, including those unfortunates who are upside-down on their mortgages. Total outstanding college loans are expected to top $1 trillion this year, making them a bigger burden than is total credit-card debt. But credit-card debt is pretty big, too. The aggregate household debt has been declining a bit since the onset of the 2008 financial crisis, but that’s not the good news that it seems: A closer look at the figures shows that the debt written off to defaults on mortgages and credit cards exceeds the amount by which U.S. households have reduced their debt. That means that all of the debt reduction that U.S. households have collectively achieved has been through default, not through paying down mortgages and credit cards, while those who have not defaulted have been going ever deeper into debt.

According to the Commerce Department, U.S. households saw their disposable income rise 0.1 percent in September — a respectable figure, though hardly one that will set the economy on fire. Unhappily, the same report found that household spending had increased by 0.6 percent, meaning that it is growing six times as fast as household income — a feat that not even the knuckle-dragging miscreants in Congress have managed. The savings rate — which has been negative quite often within recent memory — declined from 4.1 percent of income to 3.6 percent. And that savings is concentrated among a minority of U.S. households: not the wicked 1 percent, but the oldsters. The wealth gap between young and old households has never been higher, and households headed by those 65 and older have on average 47 times the net worth of those headed by people 35 and younger. Occupy Grandma’s house!

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