Gary Shilling wrote this piece for Forbes.com on the topic of deleveraging. I began blogging about this topic back in September because I believe virtually all households and businesses will need to look for ways to deleverage over the course of the next few years. Furthermore, in 20 years from now I believe we’ll look back and realize that deleveraging was the most significant macro-economic theme from this point forward.
Here are some interesting points from Gary’s article:
-The combined debt and equity of U.S. financial institutions went from 10% of gross domestic product in 1973 to 118% at the end of 2007. Over the same period household debt, including mortgages, rose from 45% of GDP to 98%.
-Consumers dropped their saving rate from 12% in the early 1980s to zero 20 years later.
How can you delevrage your personal balance sheet? Save more and spend less. If you need help with a household budget we have services available for you.
Here are links to my previous 3 deleverage postings: