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Stingy News: Debt

Cash is the only thing
08/07/21 Bonds Management Debt
"The only thing that helps a company survive these extreme revenue shocks is access to cash. Companies that either had lots of liquidity at hand or could tap into existing credit lines to increase their cash at hand were more likely to survive and recovered more quickly."

The private debt crisis
03/04/19 Debt
"One of the key and largely overlooked reasons for this disappointing growth is hiding in plain sight: the increasing global burden of private debt - the combination of business debt and household debt. Even though government debt grabs all the headlines, private debt is larger than government debt and has more impact on economic outcomes."

Staggering share of Canadians fear bankruptcy
01/15/18 Debt
"One-third of Canadians say they're now unable to cover their monthly bills while keeping up with their debt repayments, up eight points on the index since September."

World leaders in debt
11/27/17 Debt
"A report from the Organization for Economic Co-operation and Development (OECD) shows that Canadian households are among the most indebted in the world. In fact, Canada tops the list of countries surveyed."

Debt hangover
07/16/17 Debt
"In his recent book The Rise and Fall of Nations, Ruchir Sharma, Morgan Stanley's chief global strategist, concludes that the single most reliable indicator of periods of economic weakness was 'the kiss of debt rule, which shows that a major economic slowdown has always materialized when a nation's debt has grown more than 40 percentage points faster than GDP over a five-year period.' If he's right, we've got a big problem: Canada's ratio of debt to GDP rose from 294.9 per cent in 2011 to 354.5 in 2016 - an increase of 59.6 percentage points in the last five years."

Debt buyers
06/11/16 Fun Debt
"Companies that purchase debt cheaply then collect it aggressively are shockingly easy to start. We can prove it" [video]

A debt of choice
03/26/16 Government Debt
"But the federal debt is only part of our overall debt level. The provinces collectively have debts very nearly equal to the feds, bringing the combined federal-provincial debt closer to 60 per cent of GDP"

Buybacks and debt
10/10/15 Value Investing Debt
"The number one question I get about the shareholder yield factor is whether or not this debt-funding-buybacks is a big issue and something that should scare us. Asked differently, are companies that are taking on more debt to buy back shares ticking time bombs?"

We still have a buck in the till
08/30/15 Debt
"There will be failures among energy producers, and that could include nations. Failures with each will be temporary as debts get worked through/compromised and new management takes over, and high cost supply gets shut down. The question is: who will fail and who won't."

Harsh debt dynamics
12/21/14 Bonds Government World Debt
"Whether the next governmet is a revamped coalition led by the current prime minister's New Democracy, or one led by Syriza, it will face the same, harsh debt dynamics."

O Beholden Canada
10/26/14 Government Debt
"Call it Canada's summer of pension discontent. Governments throughout the country are grappling with as much as $300 billion in unfunded government-worker retirement debt. In a country of just 38.5 million people, that's a pension problem roughly equivalent to the one that California faces. And it's widely shared."

China's steelmakers into shadow banking
04/12/14 World Debt
"What's happening in China's steel industry illustrates not only how painful the economy's inevitable slowdown will be, but also how the country's complicated tangle of debts are straining the connective tissue of supply chains, endangering the whole system."

Debt limit
10/20/13 Government Debt
"A satirical short film taking a look at the national debt and how it applies to just one family."

America's default on its debt is inevitable
10/13/13 Grant Debt
"This is the unsustainable conceit of the world's superpower-cum-super debtor. By deed, if not audible word, we Americans say: 'The greenback is the world's great monetary brand. You have no choice but to use it. Like it or lump it.' But the historical record of paper currencies is clear: Governments always over-issue it. The people finally do lump it."

Hate debt again
10/06/13 Debt
"Why 2.5 billion heartbeats might change the way you think about money by Preet Banerjee"

World is right to worry about US debt
01/26/13 Debt
"The world's overwhelming presumption is that Americans will find a path to budget sustainability. Nevertheless, it is hard for many in the US to escape the nagging feeling that just maybe this time we won't. With more than $5tn of US Treasury debt, and memories of the huge inflation of the 1970s and default on gold clauses in the 1930s, foreigners would be right to worry a little."

The real fiscal problem
01/01/13 Government Debt
"Why it's not repaying the swelling national debt that necessarily by itself creates a problem for the U.S. economy; rather it's the government's increasing spending on unproductive programs in the first place, financed with increasing levels of national debt, that creates the real problem for the economy."

Taxes, inflation, default
10/25/12 Debt
"Buffett is uncomfortable with the idea that the Fed can expand its balance sheet indefinitely. He doesn't know why it won't work, but he knows that there are no free lunches, and wonders what might happen as a result."

A lost decade for savers
09/26/12 Bonds Thrift Debt
"The 1990s were a lost decade for Japan. The 2000s delivered a lost decade to U.S. investors. Now, five years into the onset of the financial crisis, with stock and bond markets booming, housing resurgent, and even Detroit redeemed, it.s savers who find themselves in a lost decade."

The global debt clock
09/08/12 Debt
"Our interactive overview of government debt across the planet"

Generational warfare
07/28/12 Taxes Government Debt
"Flash forward half a century, and the boomers who once sang along with Dylan have become the reactionary elders, clinging to their power and perks at the literal expense of everyone younger. There's a new generation gap opening up, one that threatens to tear apart the country every bit as much as past confrontations over war, free love, drugs, and sitar music. This fight is about old-age entitlements and whether the Me Generation will do what's right for the country and stop sucking up more and more money from their children and grandchildren."

Mortgaging the future
06/23/12 Debt
"Uncontrolled public debt threatens to rupture society as the older generation thrives at the expense of the young."

Austerity and debt realism
06/01/12 World Debt
"Aside from wringing their hands, what should governments be doing? One extreme is the simplistic Keynesian remedy that assumes that government deficits don't matter when the economy is in deep recession; indeed, the bigger the better. At the opposite extreme are the debt-ceiling absolutists who want governments to start balancing their budgets tomorrow (if not yesterday). Both are dangerously facile."

Meredith Whitney was right
03/12/12 Debt
"The more general point that Meredith Whitney was trying to make about public debt -- that municipal finances in this country were a mess that was only going to get messier -- was dead on."

Growth in the age of deleveraging
12/15/11 Debt
"Accumulating the mountain of debt now weighing on advanced economies has been the work of a generation. Across G-7 countries, total non-financial debt has doubled since 1980 to 300 per cent of GDP. Global public debt to global GDP is almost at 80 per cent, equivalent to levels that have historically been associated with widespread sovereign defaults."

Peak credit
12/15/11 Debt
"We've heard about "peak oil." We've heard about other resources, and how production will decline over time. But what of credit?"

Lessons from Canada's 'basket case' moment
11/23/11 Debt
"Finance officials bit their nails and nervously watched the clock. There were 30 minutes left in a bond auction aimed at funding the deficit and there was not a single bid. Sounds like today's Italy or Greece? No, this was Canada in 1994."

The great debt scare
09/23/11 Debt
"It might not seem that Europe's sovereign-debt crisis and growing concern about the United States' debt position should shake basic economic confidence. But they apparently have. And loss of confidence, by discouraging consumption and investment, can be a self-fulfilling prophecy, causing the economic weakness that is feared. Significant drops in consumer-confidence indices in Europe and North America already reflect this perverse dynamic."

Debt junkies
08/10/11 Debt
"The world is led by debt junkies who think that debt doesn't matter. They are leading us to a greater crisis where the only thing that does matter is debt, and for political reasons, some governments will not be willing to pay in full."

Debt crisis is worse than you think
07/28/11 Debt
"An honest assessment of the country's projected revenue and expenses over the next generation would show a reality different from the apocalyptic visions conjured by both Democrats and Republicans during the debt-ceiling debate. It would be much worse."

The clash of generations
07/26/11 Debt
"Anyone who thinks that this economic crisis, if prolonged, won't also hasten a global power shift has never heard of the Golden Rule: He who has the gold, sets the rules. "We are so used to the Americans providing the solutions for Europe and leading," said Vassilis T. Karatzas, a Greek money manager. "But what happens when we are both in the same boat?" What happens is that both the American and European dreams hang in the balance. Either we both put our nations on more sustainable growth paths - which requires cutting, taxing and investing for the future - or we're looking at a world in which democracies are going to turn on themselves and fight over shrinking pies, with China having a growing say over how big the slices will be."

Debt endangers growth
07/14/11 Debt
"Our empirical research on the history of financial crises and the relationship between growth and public liabilities supports the view that current debt trajectories are a risk to long-term growth and stability, with many advanced economies already reaching or exceeding the important marker of 90 percent of GDP."

Have Canadians reached their limits?
06/14/11 Debt
"If household debt was to be evenly spread across all Canadians, each individual would hold some $44,115 in outstanding debt in March 2011 while a family with two children would, relying on similar logic, be burdened with $176,461 in total outstanding household debt."

You want fries with that degree?
06/13/11 Debt
"What's more, governments might be doing some students a big favour by not encouraging them to get into debt to secure degrees and diplomas that qualify students to be little more than baristas and wait staff. You want fries with that English BA?"

Credit lines worst trend
06/04/11 Debt
""People cannot resist lines of credit. And the worst combination in the country is a line of credit and a home renovation - once they renovate one room, the other rooms pale by comparison, so they go on to the next room and it's a never-ending cycle of renovation as they get deeper and deeper and deeper in debt. The four most expensive words in the English language are 'while we're at it.' And the four most expensive letters are 'HGTV.' "We go through a credit crisis brought on by too much private debt in the developed world, particularly in the States, and our response - the Home Renovation Tax Credit. That's like starting an alcoholic's rehab by taking him on a pub crawl. The problem with governments is they want to get re-elected.""

The Euro's PIG-headed masters
06/03/11 Debt
"Europe is in constitutional crisis. No one seems to have the power to impose a sensible resolution of its peripheral countries' debt crisis. Instead of restructuring the manifestly unsustainable debt burdens of Portugal, Ireland, and Greece (the PIGs), politicians and policymakers are pushing for ever-larger bailout packages with ever-less realistic austerity conditions. Unfortunately, they are not just "kicking the can down the road," but pushing a snowball down a mountain."

Capitalists who fear free markets
05/20/11 Debt
"Japanese executives were outraged at the prospect of banks taking losses on loans to the company that produced a nuclear catastrophe. This used to be how free markets worked."

Financial Crisis Q and A
01/09/11 Debt
"The panic in 2007 was not observed by anyone other than those trading or otherwise involved in the capital markets because the repo market does not involve regular people, but firms and institutional investors. So, the panic in 2007 was not like the previous panics in American history (like the Panic of 1907, shown below, or that of 1837, 1857, 1873 and so on) in that it was not a mass run on banks by individual depositors, but instead was a run by firms and institutional investors on financial firms. The fact that the run was not observed by regulators, politicians, the media, or ordinary Americans has made the events particularly hard to understand. It has opened the door to spurious, superficial, and politically expedient "explanations" and demagoguery."

U.S. is bankrupt
08/12/10 World Government Debt
"Let's get real. The U.S. is bankrupt. Neither spending more nor taxing less will help the country pay its bills. What it can and must do is radically simplify its tax, health-care, retirement and financial systems, each of which is a complete mess. But this is the good news. It means they can each be redesigned to achieve their legitimate purposes at much lower cost and, in the process, revitalize the economy."

The muni-bond debt bomb
07/26/10 Government Bonds Debt
"Like homeowners before the housing bubble burst, states and cities have gorged on debt, extended repayment times, and used devious means to avoid limits on borrowing - all in order to finance risky projects and kick fiscal problems down the road. Though the country's economic troubles have helped expose some of these unwise practices, the downturn has brought not reform but yet more abuse. Even as Tea Party protesters and taxpayer groups revolt against excessive government spending and taxes, they are paying too little attention to the gigantic state and local debt bomb. If it can't be defused, we're all at risk."

This ain't your granpa's debt
07/26/10 Government Debt
"The deficits of the next few decades are scheduled to balloon because of budget decisions -- Medicare and Social Security and tax levels -- that are decades in the making. The political process created this time bomb and the political process will have to defuse it."

The true cost of pensions
07/07/10 World Government Debt
"But the present value of future liabilities is around 1.1 trillion, even after the government slipped in a reduction in index-linking in the recent budget. That is around 80% of GDP, a figure that of course is on top of the national debt numbers normally calculated. if the British government were to pay interest on this liability each year, the bill would be larger than the cost of servicing the official debt."

Illinois stops paying its bills
07/04/10 Government Debt
"For the last few years, California stood more or less unchallenged as a symbol of the fiscal collapse of states during the recession. Now Illinois has shouldered to the fore, as its dysfunctional political class refuses to pay the state's bills and refuses to take the painful steps - cuts and tax increases - to close a deficit of at least $12 billion, equal to nearly half the state's budget."

States of crisis
06/26/10 Government Debt
"Even as the U.S. appears to be on the mend -- gross domestic product has climbed three straight quarters -- finances in Arizona, Illinois, New Jersey, New York and other states show few signs of improvement. Forty-six states face budget shortfalls that add up to $112 billion for the fiscal year ending next June, according to the Center on Budget and Policy Priorities, a Washington research institution. State spending is 12 percent of U.S. GDP."

Is Illinois the new California?
06/22/10 Government Debt
"Like California, Illinois hasn't balanced a budget in nearly a decade, and instead uses gimmicks and borrowing to close gaps. Like California, Illinois regularly issues bonds to pay for current government operations. But unlike California, Illinois has some of the country's least-funded public employee pension plans."

Easy money, hard truths
05/27/10 Bonds Government World Debt
"Are you worried that we are passing our debt on to future generations? Well, you need not worry. Before this recession it appeared that absent action, the government's long-term commitments would become a problem in a few decades. I believe the government response to the recession has created budgetary stress sufficient to bring about the crisis much sooner. Our generation - not our grandchildren's - will have to deal with the consequences."

How will Greece get off the dole?
05/23/10 World Debt
"What the income figures fail to capture is the relative weakness of Greece's economic institutions. They are not remotely comparable to those of Germany and some of the other better-governed European Union nations, which is why the current crisis will prove so difficult to solve."

Rogoff criticizes debt strategies
05/19/10 World Debt
"Despite the headwinds of poor jobs growth and a troubled housing market, the U.S. will avoid a double dip recession, according to Kenneth Rogoff, the Thomas D. Cabot Professor of Public Policy, Harvard University."

When the Global Debt Shuffle Hits Home
05/09/10 Zweig Debt
"The U.S. now has a heavier debt burden than several of the overleveraged countries that have been branded with the scornful nickname "the PIIGS." Portugal's debt, according to the IMF, is 85.9% of its GDP; Ireland's, 78.8%; Italy, 118.6%; Greece, 124.1%; Spain, 66.9%. Perhaps there should be a new acronym, with the U.S. added to Portugal, Ireland, Italy, Greece and Spain: "PIG IS U.S.""

The future of public debt
05/08/10 World Debt
"Since the start of the financial crisis, industrial country public debt levels have increased dramatically. And they are set to continue rising for the foreseeable future. A number of countries face the prospect of large and rising future costs related to the ageing of their populations. In this paper, we examine what current fiscal policy and expected future age-related spending imply for the path of debt/GDP ratios over the next several decades. Our projections of public debt ratios lead us to conclude that the path pursued by fiscal authorities in a number of industrial countries is unsustainable. Drastic measures are necessary to check the rapid growth of current and future liabilities of governments and reduce their adverse consequences for long-term growth and monetary stability."

Europe finds the old rules still apply
05/06/10 World Debt
"A recurring theme of my academic research with Carmen Reinhart is that 'graduation' from emerging market status is a long, painful process that can take 75 years or more to complete. Twenty years without, say, a sovereign debt crisis is significant, but hardly enough definitively to declare a country a 'graduate'. Greece resolved its last sovereign default only in the mid-1960s and Portugal had an International Monetary Fund programme as recently as 1984. (Spain's modern history is much better, despite holding the record - more than 12 - for most independent sovereign default episodes.)"

Lowering the boom on leverage
02/22/10 Debt
"For those who worry that limiting leverage is somehow inconsistent with American tradition, it is worth remembering that the nation's founders strictly limited bank leverage in their own time, frequently at less than 4-to-1. Although bank runs remained a problem in early America because of the absence of deposit insurance, the dangers of high leverage were already well appreciated. Let's not lose sight of that wisdom now."

Seven states of energy debt
02/08/10 Government Debt
"I've identified seven large US states by four criteria that are sure to cause trouble for Washington's political class at least for the next 3 years, through the 2012 elections. These are states with big populations, very high rates of unemployment, and which have already had to borrow big to pay unemployment claims. In addition, as a kind of kicker, I've thrown in a fourth criteria to identify those states that are large net importers of energy. Because the step change to higher energy prices played, and continues to play, such a large role in the developed world's financial crisis it's instructive to identify those US states that will struggle for years against the rising tide of higher energy costs."

Could California really default?
01/27/10 Government Debt
"One reason these investors had fled new issues, of course, is because munis are supposed to be conservative investments that offer only a modest return to their holders in exchange for being able to sleep peacefully at night. A loss of confidence in this market doesn't occur quickly but is a long-term process, and politicians can exacerbate the uncertainty when their rhetoric becomes more and more bombastic and their assurances steadily more unrealistic, something that's now becoming commonplace among California officials."

Better off deadbeat
01/21/10 Law Debt
"While most Americans with unpaid bills dread the collector's call, Cunningham sees them as lucrative opportunities. Many collection and credit card companies, intentionally or not, violate little-known consumer rights laws, and Cunningham's favorite pastime is catching them doing so and then suing them. In fact, it's a profitable side job."

Wave of debt payments facing U.S.
11/25/09 Government Debt
"The United States government is financing its more than trillion-dollar-a-year borrowing with i.o.u.'s on terms that seem too good to be true."

The debt economy
11/16/09 Government Debt
"John Kenneth Galbraith wrote that all financial crises are the result of 'debt that, in one fashion or another, has become dangerously out of scale.' The recent financial crisis was no exception, with everyone - homeowners, private-equity investors, our biggest banks - taking on enormous amounts of debt. If it's frustrating that the government is footing the bill to clean up the mess, it's even worse that the government helped pay for the debt binge that created the mess in the first place, thanks to a tax system that actually subsidizes borrowing. Debt didn't get dangerously out of scale because the system was broken. It got out of scale, in part, because the system worked."

Squawking hawks
11/13/09 Government Fun Debt
"A once-endangered species is staging a robust comeback: the deficit hawk. Hunted nearly to death during the Bush years, many varieties not seen in Washington in a decade are now perching on branches and dropping their wisdom. Look, there's the puff-chested congressional peacock hawk, frequently seen strutting about Sunday-morning-TV-show sets complaining about pork while emitting loud honks on the receipt of stimulus funds. The furrowed-brow warbler hawk (natural habitat: the op-ed pages) loathes deficit spending for the purpose of eliminating social injustice but loves it when the spending is used to finance military actions abroad. The blue-bellied partisan hawk nests in think tanks; it goes mute when members of its own party run the show but squawks loudly when opponents run up debt. On Nov. 3, birders sighted the rare skinny parrot hawk, which repeats back calls about fiscal probity. Said President Barack Obama on that date: 'The government is going to have to get serious about reducing our debt levels.'"

Up against a wall of debt
10/30/09 Debt
"The idea that the government of a major advanced country would default on its debt - that is, tell lenders that it won't repay them all they're owed - was, until recently, a preposterous proposition. Argentina or Russia might stiff their creditors, but surely not the likes of the United States, Japan, or Great Britain. Well, it's still a very, very long shot, but it's no longer entirely unimaginable. Governments of rich countries are borrowing so much that it's conceivable that one day the twin assumptions underlying their burgeoning debt (that lenders will continue to lend and that governments will continue to pay) might collapse."

Global debt comparison
09/16/09 Government World Debt
The Economist's debt clock

Spend now, pay later
08/22/09 Government Thrift Debt
"With noble intentions, much of what was advocated and popularized by the Woodstock generation involved an increased role for government in the economy. They argued that 'smart people' in the government would 'manage' the economy and 'protect' people from themselves. Government would run 'temporary' deficits and 'create' jobs. It was argued that society's prosperity needed to be shared through government-administered programs, regulations and taxes."

The road to bankruptcy
05/21/09 Debt
"At the end of his book's harrowing account of mortgage mistakes and credit card crises, Edmund Andrews writes: "While our misadventure had certainly been more extreme than those of many other Americans, our situation was not all that unusual." And indeed the book reads like the story of an American Everyman, easily sucked in to the alluring world of easy credit as he struggled to blend a new family. The terrifying implication is that it could happen to you--to anyone who leads with their heart and not their head. But en route to that moral, it turns out the story has been tidied up a little. Patty Barreiro, Andrews' wife, has declared bankruptcy twice. The second time was while they were married, a detail that didn't make it into either the book or the excerpt that ran in last Sunday's New York Times Magazine."

My personal credit crisis
05/16/09 Debt
"At any other time in history, the idea of someone like me borrowing more than $400,000 would have seemed insane. But this was unlike any other time in history."

CEO leverage vs corporate leverage
05/04/09 Management Debt
"We find that firms behave remarkably similarly to how their CEOs behave personally when it comes to debt financing and leverage. We compile a comprehensive sample of home purchases and financings among S&P 1,500 CEOs. Debt financing in a CEO's recent home purchase is used as a revealed preference of the CEO's innate personal tolerance for leverage. We find a strong and robust positive relation between personal and corporate leverage. A one standard deviation (34 percentage points) increase in CEO personal leverage is found to be associated with 20 percent higher corporate leverage for the median large public U.S. firm. This relation is found to be significantly stronger for firms with weaker governance, suggesting that sorting and endogenous matching of CEOs and firms does not entirely explain our evidence. Our results have implications for our understanding of corporate capital structure decisions and suggest more generally that an analysis of CEOs' personalities and personal traits can convey important information about the financial policies of the firms they manage."

House of cards
03/09/09 Debt
"This is the paradox of deleveraging: it's good for borrowers to reduce their debt, and good for lenders to be more rigorous in their standards, but when everyone deleverages at once it does real damage. It's like a drug addict whose dealer cuts him off: it's good to stop using, but withdrawal is painful. The end of the credit-card boom isn't going to wreak as much havoc as the end of the housing boom. But it is helping to put a brake on our spending. And, at this point, every little bit hurts."

Lowering credit scores
03/03/09 Debt
"Wayne Brown has a dilemma. If he reduces his credit-card balance, American Express Co. will cut his credit limit to the amount of the new balance, he said. If he doesn.t make a big payment, his interest rate may skyrocket."

The gravity-defying debt problem
02/25/09 Debt
"The prices of real estate, stocks and many commodities continue to plummet this year. But one figure appears unlikely to decline substantially anytime soon, to the great distress of consumers, companies and taxpayers alike: the amount of debt piled on top of the U.S. economy."

A short history of the national debt
02/18/09 Government Debt
"It was not ever thus. Before the Great Depression, balancing the budget and paying down the debt were considered second only to the defense of the country as an obligation of the federal government. Before 1930, the government ran surpluses in two years out of three. In 1865, the vast debt run up in the Civil War amounted to about 30% of GDP; by 1916 it was less than a tenth of that. There even was a time when the U.S. made it a deliberate policy to pay off the national debt entirely -- and succeeded in doing so."

The age of obligation
12/19/08 Debt
"Excessive debt is the key to this crisis; it is the reason we are confronting no ordinary recession, curable by a simple downward adjustment of interest rates. It is the reason we still have to fear, if not a second Great Depression, then very likely the biggest recession since the 1930s. We are living through the painful end of an age of leverage which saw total private and public debt in the US rise from about 155 per cent of gross domestic product in the early 1980s to something like 342 per cent by the middle of this year."

I.O.U.S.A. 30-minute movie
11/09/08 Government Debt
"Wake up, America! We're on the brink of a financial meltdown. I.O.U.S.A. boldly examines the rapidly growing national debt and its consequences for the United States and its citizens. Burdened with an ever-expanding government and military, increased international competition, overextended entitlement programs, and debts to foreign countries that are becoming impossible to honor, America must mend its spendthrift ways or face an economic disaster of epic proportions."

Student loan fugitives
10/25/08 Debt
"When faced with unaffordable monthly payments and relentless creditors, some see leaving the country as their only way out."

Mad TV - Free Credit Card
09/06/08 Fun Debt
A skit on the perils of credit from Mad TV

The death of the credit card economy
09/01/08 Thrift Debt
"The most revolutionary notion in commerce today is one of the oldest. If you want to buy something, you may actually have to pay for it. We are reverting from a "borrow and buy" economy to the "cash and carry" model of our grandparents."

Is debt your destiny?
08/31/08 Thrift Debt
"Credit changes the way we spend and think. If you're broke, research shows, there's a good chance you'll stay that way a long time. But there are ways to fight the pattern."

The giant pool of money
08/23/08 Real Estate Bonds Markets Debt
"A special program about the housing crisis produced in a special collaboration with NPR News. We explain it all to you. What does the housing crisis have to do with the turmoil on Wall Street? Why did banks make half-million dollar loans to people without jobs or income? And why is everyone talking so much about the 1930s? It all comes back to the Giant Pool of Money."

Another inconvenient truth
08/17/08 Government Debt
"America's infamous debt clock, near New York.s Times Square, was switched off in 2000 after the national burden started to fall thanks to several years of Clinton-era budget restraint. However, it was reactivated two years later as the politically motivated urge to splurge once again took over. The debt has since swollen to $9.5 trillion, with the value of unfunded public promises (if you include entitlements such as Social Security and Medicare) nudging $53 trillion.or $175,000 for every American.and rising. On current trends, these will amount to some 240% of GDP by 2040, up from a just-about-manageable 65% today."

Eight centuries of financial crises
06/25/08 Markets Government Academia Debt
"This paper offers a 'panoramic' analysis of the history of financial crises dating from England's fourteenth-century default to the current United States sub-prime financial crisis. Our study is based on a new dataset that spans all regions. It incorporates a number of important credit episodes seldom covered in the literature, including for example, defaults and restructurings in India and China. As the first paper employing this data, our aim is to illustrate some of the broad insights that can be gleaned from such a sweeping historical database. We find that serial default is a nearly universal phenomenon as countries struggle to transform themselves from emerging markets to advanced economies. Major default episodes are typically spaced some years (or decades) apart, creating an illusion that 'this time is different' among policymakers and investors. A recent example of the 'this time is different' syndrome is the false belief that domestic debt is a novel feature of the modern financial landscape. We also confirm that crises frequently emanate from the financial centers with transmission through interest rate shocks and commodity price collapses. Thus, the recent US sub-prime financial crisis is hardly unique. Our data also documents other crises that often accompany default: including inflation, exchange rate crashes, banking crises, and currency debasements."

Your lifestyle may hurt your credit
06/19/08 Debt
"Most borrowers know a late payment or high outstanding balance can hurt their credit. But what about frequenting a massage parlor, retreading a tire, or visiting a marriage counselor? Such activities count, too, according to a suit filed by the Federal Trade Commission in federal court in Atlanta on June 10 against card issuer CompuCredit"

Subprime in sheep's clothing
05/08/08 Markets Real Estate Debt
"Unlike subprime folk with expired teasers who have been putting capital into their homes for months and perhaps years, many Alt-A borrowers with years left on their payment-lite teaser periods are going to wake up one day to homes that have hugely deteriorated in price and have little if any equity in them. That is the exact recipe for foreclosure that bank insiders and credit analysts are warning about. Mark Zandi of Moody's estimates that, by the end of June, 21.0% of all first-mortgage holders in the United States, or 10.6 million homeowners, will have zero or negative equity in their homes. For now, Alt-A loans are performing better than subprime mortgages. The risk, however, is that generally well-heeled Alt-A borrowers will adopt the same flippant attitude to paying their debts as lenders did in evaluating them. An additional pressure: 23.7% of Alt-A loans were not taken out for primary residences are often considered investments and have a higher rate of foreclosure. Only 8.7% of subprime mortgages were for absentee landlords, according to the New York Federal Reserve Bank."

Subprime outcomes
05/06/08 Academia Economy Real Estate Debt
"Our second point is that house price depreciation - negative house price appreciation(HPA) - is the main driver of foreclosures. The easiest way to see this is to look at aggregate data. Figure 1 shows that periods of exceptionally high HPA in Massachusetts, as in 2002-2004, are associated with exceptionally low numbers of foreclosures, while periods of negative HPA, such as 1989-1991 and 2005-2007, are associated with high foreclosure rates. Cash flow problems at the household level, driven by job loss, for example, play a role, but only when HPA is low. For example, in 2001, a recession generated a record high number of delinquencies, a sign that many households had problems making monthly mortgage payments. During this time, however, there was a record low number of foreclosures in Massachusetts. Thus, the phenomenal levels of HPA in the early 2000s enabled many borrowers to either refinance or sell to avoid foreclosure."

Here comes the next mortgage crisis
04/17/08 Markets Real Estate Debt
"California should be the poster child for a mortgage-loan bailout. In few other places have so many taken on such onerous debts with so little equity. Unfortunately, the crisis in California is going to get much worse, and there is no bailout that will solve it. Why? Because if the first stage of the foreclosure crisis was about people who could not afford their mortgages, the next stage will be about people who have every reason not even to try to pay their mortgages."

You thought you had an equity line
04/14/08 Debt
"Reeling from losses on their wretched loan decisions of recent years, lenders are preventing borrowers with pristine credit and significant equity in their homes from tapping into credit lines that they paid dearly to secure. In the last 30 days, lenders have sent several hundred thousand letters advising borrowers that their home equity lines of credit are frozen"

Student lenders stifled
04/04/08 Markets Bonds Debt
"The collapse of the $330 billion auction-rate securities market has brought debt sales by U.S. public student-loan agencies to a halt. No municipal bonds backed by student loans were sold in the first quarter, the first time that happened in almost 40 years, according to Thomson Financial. The inability to obtain financing differs from states, cities, schools and hospitals, which sold $82 billion of bonds to fund public works and replace failed auction debt that stuck them with penalty rates as high as 20 percent."

Buyers' revenge
03/28/08 Crime Real Estate Debt
"Analysts predict that as many as two million homeowners could enter foreclosure this year, caught by a slowing economy, falling house prices and, in many cases, adjustable mortgages with rates rising from high to higher. In Las Vegas, 1.9% of homes in the Las Vegas area were in the foreclosure process in January, almost triple the rate of a year earlier, according to First American CoreLogic Inc., a Santa Ana, Calif., real-estate and mortgage data company."

10 ways to curb sleazy debt collectors
03/24/08 Debt
"It's tough conditions like these that tempt collectors to get rough with consumers. Given that the debt-collection industry has trouble restraining itself during good times, you can imagine how bad this could get."

The next shoe to drop in housing
03/15/08 Bonds Real Estate Debt
"The credit crunch has finally hit the traditional mortgage market. Investors are now shunning mortgage-backed securities issued by government sponsored enterprises Fannie Mae and Freddie Mac, which have been critical in keeping the real estate market from completely falling apart. Some fear this development will make it harder for people, even those with strong credit histories, to get a home loan."

Lenders face still more misery
03/13/08 Accounting Debt
"A closer look at the books of big lenders reveals several weak spots that haven't yet shown up in the financial results. At many banks, bad loans are piling up faster than the amount of money they're setting aside to cover them. Meanwhile, housing lenders booked income on vulnerable exotic loans and mortgage securities before they collected the money - paper gains that may be reversed through writedowns. Plus the values of some troubled loans, which have been trimmed modestly so far and shown up in previous losses, could still be overstated. Why haven't these items hit lenders' bottom lines? Largely because of the ambiguity and complexities of the accounting rules. Banks have a lot of wiggle room when it comes to reporting the profits and values of complex loans and securities. For one thing, their earnings can far exceed the amount of cash coming in the door. At the same time, their losses aren't always based on hard numbers but rather on debatable judgment calls. With the housing market showing no signs of recovery anytime soon, it's becoming clear that some of their assumptions have been overly optimistic."

A low, low interest rate of 396 percent
12/14/07 Debt
"A payday loan is a small-dollar, short-term loan with fees that can add up to interest rates of almost 400 percent. They're generally taken out when the borrower is caught short on cash and promises to pay the balance back next payday. If it sounds like legal loan-sharking, it's not. "Loan sharks are actually cheaper," said Bill Faith, a leader of the Ohio Coalition for Responsible Lending. The industry portrays it as emergency cash, but critics say the business model depends on repeat borrowing where the original loans are rolled over again and again."

Borrowers face dubious charges
11/06/07 Debt
"As record numbers of homeowners default on their mortgages, questionable practices among lenders are coming to light in bankruptcy courts, leading some legal specialists to contend that companies instigating foreclosures may be taking advantage of imperiled borrowers. Because there is little oversight of foreclosure practices and the fees that are charged, bankruptcy specialists fear that some consumers may be losing their homes unnecessarily or that mortgage servicers, who collect loan payments, are profiting from foreclosures."

Prisoners of debt
11/01/07 Debt
"In a financial version of Night of the Living Dead, debts forgiven by bankruptcy courts are springing back to life to haunt consumers. Fueling these miniature horror stories is an unlikely market in which seemingly extinguished debts are avidly bought and sold."

Life and debt in suburbia
10/05/07 Thrift Debt
"Assessing how the neighbors are doing financially and what that means about how we are doing is practically a national pastime. The guessing game starts off as harmless pillow talk and community pool chatter, an outgrowth of natural curiosity. Just how much money must Susie and Bob have to be able to afford that new kitchen, three cars and a family safari? Then too, every homeowner has a vested interest in the financial well-being of his or her neighbors. Homeowner associations have long understood that nothing raises the value of a home more than an expanse of trim lawn and well-kept homes on either side. But the finances of those around you affect more than just the perceived value of your property. They also, like it or not, help shape how much you spend and save and color your perceptions of your own financial well-being."

Confessions of a credit-card pusher
09/05/07 Debt
"Politicians and college administrators are growing increasingly concerned about the damage that credit-card debt is causing students, and they're trying to crack down on some of the card companies' practices. They're limiting marketing on some campuses and trying to restrict the size of credit lines extended to students. Earlier this year, the state legislatures in Texas, Oklahoma, and New York moved to clamp down on credit-card marketing to college students"

The poverty business
05/19/07 Debt
"In recent years, a range of businesses have made financing more readily available to even the riskiest of borrowers. Greater access to credit has put cars, computers, credit cards, and even homes within reach for many more of the working poor. But this remaking of the marketplace for low-income consumers has a dark side: Innovative and zealous firms have lured unsophisticated shoppers by the hundreds of thousands into a thicket of debt from which many never emerge."

Down payment rule change won't alter much
04/24/07 Debt
"Murphy's Law, adapted to the housing market of spring, 2007: What can become more expensive, will become more expensive. House prices and mortgage rates certainly conform these days, but there's one glaring exception. Effective immediately, you can avoid the hefty cost of mortgage-default insurance if you make a down payment of at least 20 per cent, down from the old standard of 25 per cent."

Meet the parents-backed mortgage
04/23/07 Debt
"The shared equity deals can be a prudent alternative to some of the more creative financing techniques of recent years. Many young homeowners who took on interest-only mortgages, piggyback loans, option adjustable-rate mortgages, and other such gimmicky products are finding themselves financially stretched as the cheaper teaser rates expire and higher market rates kick in. In sharp contrast, equity-sharing deals offer the homeowner a fiscally conservative package. Investors, usually parents, typically put in cash to allow the buyers to amass a down payment of at least 20%. That allows buyers to qualify for a conventional 30-year, fixed-rate mortgage. The equity sharers get back their initial stake plus 10% to 50% of the profits."

A big lender's credit card trap
12/06/06 Debt
"Capital One Financial keeps the limits low and offers its most vulnerable borrowers additional cards instead -- helping them dig ever-deeper holes with penalties of hundreds of dollars a month."

Fortune's fools: why the rich go broke
09/18/06 Debt
"Mr. Foreman, who stared down financial collapse as an adult despite a troubled, impoverished childhood, said he knew real wealth when he saw it. "If you're confident, you're wealthy," he says. "I've seen guys who work on a ship channel and they get to a certain point and they're confident. You can look in their faces, they're longshoremen, and they have this confidence about them." He says he can spot a longshoreman who has enough equity in his home and enough money in the bank to feel secure, and that some people, no matter how much money they have, never get there. "I've seen a lot of guys with millions and they don't have any confidence," he says. "So they're not wealthy.""

The bankruptcy boom is back
08/14/06 Debt
"A tough 2005 law initially slashed the number of filings, but the numbers are rising again because the root causes of unpaid debt were never addressed."

Uncle Sam cracks the whip on students
01/19/06 Debt
"The stakes on student loans just got higher: Not only have rates soared, but the debt can haunt you all the way to the grave."

Bankruptcy law backfires on credit card issuers
12/10/05 Debt
"The industry muscled through tough changes that were supposed to make more filers repay some of what they owe. But that isn't happening."

The true cost of changing careers
12/04/05 Debt
"Just getting the education your dream job requires can cost a bundle. Consider all the trade-offs before taking out your student loans."

Rush to file for bankruptcy
10/16/05 Debt
"For the week ending Oct. 8, bankruptcy courts reported a total of 102,863 filings, up from the previous record high of 68,387 the week before, according to data from Lundquist Consulting. Year-to-date, the number of filings has grown 19.4 percent compared with the same period in 2004. Based on preliminary data, Lundquist researchers are expecting to see more than 200,000 personal bankruptcy filings for for the week ending Oct. 15, said Jane Truch, senior manager of research and analytics at Lundquist."

Too broke even to declare bankruptcy
09/30/05 Debt
"One of the indignities of going broke is that filing for relief is expensive and getting more so. Here are six ways to scrape up the cash."

Crazy loans: Is this how the boom ends?
09/18/05 Debt
"Lenders are pushing risky loans with low payments. Desperate home buyers snap them up. Worried yet?"

How teens get sucked into credit-card debt
09/11/05 Debt
"Card companies are now soliciting high school students, who too easily find themselves buried in red ink."

Hang on for a tidal wave of bankruptcies
08/18/05 Debt
"There's an Oct. 17 deadline looming: Changes in bankruptcy law will make erasing debts more difficult. But many who rush to file may find their troubles are worse later on."

7 ways to fight off bankruptcy
08/08/05 Debt
"Single women -- and particularly single moms -- have a tenuous hold on financial security and face a serious risk of bankruptcy."

Who killed Richard Cullen?
07/21/05 Debt
"I tell Lord Griffiths about Richard Cullen's suicide, and he sighs. "I had a friend," he replies. "A clergyman. I met him for dinner one night. He was suffering from cancer. He broke down over dinner and confessed to me that he had 32 credit cards. He said he was using each card to pay off the charges on the others. He told me about the shame he felt. You could just sense the emotional pressure. I'm no doctor ... " Lord Griffiths pauses, then says, "He died soon afterwards." Then he says that a friend of his recently compared the credit card industry to slavery - that the lenders are the new slave masters and the borrowers the slaves."

Making it to the top
04/24/05 Debt
"It's never easy, but getting rich is still being done every day. All it takes is leverage."

Health costs spur bankruptcy
02/02/05 Debt
"Half of all U.S. bankruptcies are caused by soaring medical bills and most people sent into debt by illness are middle-class workers with health insurance, researchers said Wednesday."

Spend now, suffer later
01/28/05 Debt
"It's easy to price a vacation. As for your retirement plan, you probably don't even want to answer because you probably don't have one. Why is it so hard?"

Canadians deeper in debt, vulnerable to economic shocks
01/20/05 Debt
"A new report from CIBC World Markets warns that Canadian households are deeper in debt than a year ago and are vulnerable to any economic shock."

Borrowing to invest backfires badly
11/28/04 Debt
"In 2001, she added $50,000 to her $45,000 mortgage in order to buy stocks within mutual funds that she hoped would produce capital gains sufficient to pay off her mortgage and the new loan. She wound up with a $17,000 loss. Today, she doubts it was wise to make bets on the stock market. She wants to recover financially -- pay down her enlarged mortgage, cut her investment risk, and put the losses behind her."

The best idea is to toss those credit card cheques
10/23/04 Debt
"For a glimpse of the big banks at their worst, just open your monthly credit card statement. If you think this is a rant against credit card interest rates, you're only partly right. Card rates are high, but immaterial if you pay your balance off in full every month. What's objectionable is the way some financial institutions try to circumvent this fact. They do it with an odious little device that presents itself as a cheque that you can write to anyone and have the money applied to your monthly credit card bill."

Make student debt more manageable
09/12/04 Debt
"I've got three pieces of advice for those who are considering student loans, or have already borrowed for an education."

With this debt, I thee wed
07/10/04 Debt
"Finally, it's worth mentioning that financial problems are one of the main causes of marital trouble. Olivia Mellan, author of "Money Harmony: Resolving Money Conflicts in Your Life and Relationships," has found that most couples have diametrically opposed spending habits, and it's not uncommon that one spouse enters the marriage with a mountain of debt. She offers one piece of advice: Share all your money secrets, but don't share the money."

Debts on homes rise for elderly
07/04/04 Debt
" As Americans have rushed to borrow at historically low interest rates, an unlikely group has led the charge: the elderly."

A fresh start: Bankruptcy is no dead end
03/24/04 Debt
"With a bankruptcy, all of the individual's assets -- including real estate, cars and boats -- vest with the trustee and are then liquidated on behalf of the creditors, with some exceptions depending on the province. A person living in Ontario, for example, can keep $5,000 of personal belongings, $10,000 of household goods, $5,000 of vehicles and $10,000 of tools of the trade."

Advisors urge caution as CMHC eases rules
02/26/04 Debt
"Sceeles says the CMHC announcement comes at an odd time, considering the fuss that's been made in recent years regarding the high level of consumer debt in North America."

Two new books on debt can help dig you out of it
01/20/04 Debt
"You're either born smart about debt or you learn through bitter experience. Two new books offer a third way -- let experts teach you the ins and outs."

Avoid the home equity hangover
12/15/03 Debt
"Debt in lines of credit has jumped 31 percent this year. Don't let equity become a license to spend."

The hard sell for reverse mortgages
11/20/03 Debt
"Mandatory mortgage insurance ensures that you (or your heirs) don't end up owing more than the house is worth. But it's entirely possible to drain all or most of your home's equity."

Payday Loans = Costly Cash
10/06/03 Debt
"The ads are on the radio, television, the Internet, even in the mail. They refer to payday loans - which come at a very high price."

Be a smart lender
07/25/03 Debt
"Lending money can be risky at the best of times, but lending it to family members gets downright personal. Yet with the economy and job situation so rocky, family handouts are sometimes the only option. Lending wisely can lessen the angst if you're hoping to see that money -- and a continuation of the relationships -- again."

Want to refinance your mortgage? Do it now
07/17/03 Debt
"If you're thinking about refinancing your mortgage, do it now. Even if borrowing costs edge lower in the months ahead, you won't regret locking in at today's rates."

Canadians use home equity to take out $22-billion
06/23/03 Debt
"Canadians are using the rising value of their homes and the plunging cost of loans to take on debt at an unprecedented rate, according to a new report by economists at CIBC World Markets."

Are you a refi junkie?
05/26/03 Debt
"Refinancing is all the rage. But when does this savvy financial move become a short-sighted mistake?"

Better be sure you can pay the bill
05/14/03 Debt
"Welcome to the great Canadian debt pigout. Mortgages, lines of credit, loans, credit cards -- you name it, people are using it to take on debt.Does debt Armageddon await? Some people are definitely going to struggle if interest rates move higher, but Canadians are in surprisingly good shape over all."

Canadian government debt stands at $2.5 trillion
04/24/03 Debt
"Each Canadian Taxpayer is on the Hook for $172,416 According to Fraser Institute Study."

The implications of cancelling credit cards
01/17/03 Debt
"There are a lot of people out there that are carrying a stack of credit cards. What is the downside of carrying so many of them?"

Killing the money vacuum
10/28/02 Debt
"Getting out of debt is a major goal for many people, but most do not have a plan for doing it. Well, if you're in this group - NO MORE! With a few minutes, a piece of paper, ruler, and a pencil, we can create a basic plan that will get you out of debt."

5 signs you're a chronic spender
08/23/02 Debt
"Even if your debt is under control, you still may be shelling out more than you should."

A strategy for dealing with debt in tough times
08/14/02 Debt
"Here's the strategy: Consider selling some of your non-registered investments that have dropped in value (I'm guessing you've got some), use the cash proceeds to pay down some of your bad debt (credit cards, a line of credit or even your mortgage), then take out a new loan to replace those investments you've liquidated."

Record debt levels leave us vulnerable
08/13/02 Debt
"Apart from destroying equity, vacation plans and families, excessive debt plays a useful role in society: providing fodder for famous last words."

Easy money
04/28/02 Debt
"Consumers need credit: From car rentals to airline tickets, credit cards are a necessity. Most of us can't buy property without a mortgage. Add in the payments Canadians are making to car loans, student debt and lines of credit, and debt is clearly a way of life. And with interest rates so low, it's bound to get worse. No one's saying not to borrow, just make sure you're doing it the right way"

Debt overload: 5 red flags
10/14/01 Debt
Remove the shackles of monthly payments to achieve a happier and more productive life.

The Stingy News Weekly

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