Comments on: How Much Debt is Too Much? http://gibrannicholas.com/2009/02/11/how-much-debt-is-too-much/ Dialogues with Myself... Fri, 12 Mar 2010 05:59:08 +0000 hourly 1 http://wordpress.com/ By: Shawn Swaney http://gibrannicholas.com/2009/02/11/how-much-debt-is-too-much/#comment-36 Fri, 12 Mar 2010 05:59:08 +0000 http://gibrannicholas.com/?p=167#comment-36 Another good post. I posted a plug for your blog at mine. Anyway, I am sure most people forget the points you are discussing.

]]> By: Jonathan Devine http://gibrannicholas.com/2009/02/11/how-much-debt-is-too-much/#comment-7 Thu, 12 Feb 2009 22:06:09 +0000 http://gibrannicholas.com/?p=167#comment-7 The debt ratio seems modest in your comparison compared to the GDP, but why use GDP instead of annual tax revenues? Using the GDP and implying the dept ratio is modest also doesn’t account for that fact that in essence the Government is taking out this loan for you.

If I walked in to a bank, and wanted a “regular” loan for someone making $140k, say one million. During the interview I tell the agent I already have a little mortgage of $120, but there is no equity, the rate could go up to anything at any time, and could even result in another loan whether I agree or not. Besides that I already have most that $140 tied up in other liabilities. How impressive is that?

It’s not so pretty, or modest all of the sudden.

Your comparison also assumes the GDP is fixed. What if the mechanics of the Pork Bill cause the GDP to shrink? Or a better question; what is growing faster, our private dept or our GDP?

So yes, the debt is too much, if not in dollars and cents, its volatile unknowns.

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