One reason many pundits feel this particular downturn will be quite nasty is the level of debt consumers have versus their savings. Since July 1982, when the stock market bottomed, Americans have been dis-saving and leveraging up like nobody's business.
Since Alan Greenspan became Federal Reserve Chairman in 1987, the Federal Reserve has always supplied easy money when the economy hit the skids. As a result, Americans were never forced to retrench by reducing debt and rebuilding savings in anticipation of economic upswings. The result has been an ever increasing debt load and a low savings rate not seen since the Great Depression.
If you remember my separate charts of the day on savings and on household debt, you'll know that Americans have never been so indebted and have never sa...
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Edward Harrison is the founder of Credit Writedowns and a former career diplomat, investment banker and technology executive with over twenty five years of business experience. He has also been a regular economic and financial commentator in print and on television for the past decade. He speaks six languages and reads another five, skills he uses to provide a more global perspective. Edward holds an MBA in Finance from Columbia University and a BA in Economics from Dartmouth College.