I asked:
>can't assets be used as collateral, so that the debt/asset ratio is
>relevant?
Alex writes:
>The point is that the debt/asset ratio ( 'assets as collateral') is a
>misleading indicator of the capacity to borrow *of the private sector as a
>whole*. From other micro-perspectives ( whatev
Hello,
I am sorry to insist, but I think this is a very important issue.
Jim wrote (after a paragraph of mine):
>3) The limit to borrow, in our opinion the binding constraint in the last
>resort, is set by the ratio of debts to *income*, because debts must be
>serviced by cash. The household se
Quoting me:
>"It's not US _savings_ (i.e., assets) that are "non-existent." Rather,
>it's US _saving_ (net addition to savings) that is negative. Overall US
>consumer net worth is _positive_, not negative (even though this net worth
>did fall during the last year)."
Alex comments:
>There seems
Hello,
there is one thing that I think is important enough to emphasise, in
relation with our analysis and what is believed elsewhere.
It is about the saving rate, and whether the private sector balance is
sustainable or not.
Quoting Jim Devine:
"It's not US _savings_ (i.e., assets) that are "non
