Earn What You Spend

While there is some debate on the effectiveness of Obama’s stimulus plan - what is certain is that it will greatly add to our national debt. 
In a situation like ours, this is fine in the short run - Keynes famously advocated running a deficit to prop up spending and spur growth, and our failure to [...]

We should be roundly surprised at the number of individuals who spend more than they earn, but living within your means has gone distinctly out of fashion in the past decades.  So when we hear of the massive credit card, auto, and mortgage debt accrued by friends and family alike, we aren’t surprised in the [...]

The United States Fed promised another $800 billion to fight the credit crisis yesterday.  First, the bad news about the economy: 
The government reported on Tuesday that the economy contracted by 0.5 percent in the third quarter, slightly worse than previously estimated. But private forecasters predict that economic activity will fall by 4 to 5 percent [...]

In yesterday’s NYTimes, David Leonhardt has one of the best articles about the slowdown in consumer spending I have read.  It is pretty widely agreed that this slowdown is one of the more serious challenges currently facing our economy - with consumer spending making up two-thirds of our economy, every drop in total consumer spending [...]

Underwater mortgages are easy to understand: they occur when a homeowner owes more on their house than what they could get if they sold the house.  That is, the outstanding mortgage is greater than their home value. 
But they are very interesting and consequential phenomenon, especially considering a large number of those who are underwater on their houses put [...]

One point I keep repeating (over and over…) is that we still have too much leverage in our financial system.  Consumers, corporations and our government are all overleveraged.  What does that mean?  We need to deleverage.  But just because we need to do something doesn’t mean it will be easy; it just so happens that [...]