patrick.net

Sorry, it's $136,000 total debt for CA and $154,000 for zip code 94040

Robert,

I agree that banks have been way too loose with loans lately and they're going to have to beef up their collections department (with ex-mortgage brokers?). But even the best designed lending system will have some defaults and foreclosures, and banks cushion themselfs by charging extra points to cover the risk.

Besides, those loans are already given out and there's no point crying over spilt milk. Even bank legal departments of medium intelligence ought to now focus on maximizing collections.

Randy,

Sorry, I was doing a bit of late night wishful thinking last night. I know moving away from free market brings up a whole different set of problems. But I'm still troubled by stories of seemingly intelligent and able people going tens of thousands of dollars into credit card debt, whether the debt was from an eBay Beanie Baby buying spree or because they lost their job and lived on credit cards. I also don't like America's wasteful Madison Avenue driven consumption habits. It's a bit of personal snobbishness. (My boyfriend would say hypocrisy, since I buy a lot of kitchenware for him and his cooking never goes beyond cooking spagetti and using the microwave).

As for C driven economies. I agree in the short run, consumption plays a part. But in the long run, those consumption habits are constrained by production, determined by natural resources and S & I. While short term consumption habits are relatively inelastic, people are capable of consuming much more or much less if they are forced to do so.

As for the FT numbers. Most people still had jobs during the Great Depression. All we need is 20% of houses underwater in places like CA and DC, and for the owners to default, and we'll be in a world of hurt.

BTW I've gone back and read the Japan stickiness article more close. You're right, that would be a scary prospect. I think the US would be more volatile and faster moving.