FORGET PARIS HILTON-- BUSH'S ECONOMIC "STRATEGIES" HAVE LEFT AMERICAN FAMILIES UP THE CREEK WITHOUT THE PADDLE

I was surprised this morning by the number of e-mails I got from people with questions about the "Paris Hilton story" yesterday. And, wisely, no one acknowledged Paris Hilton's existence. Basically, everyone was stunned by one fact. Here's an example from Dan:

holy shit. so I just read your amazing/chilling "Paris Hilton" post, and, well, among the whole sordid cesspool of numbers, one jumped out at me:

"Number of households using credit to cover basic living expenses: 7 in 10."

Does that not count mortgages on homes? Like, does it only count groceries and health care and stuff like that? (Hint: please say it also counts mortgages. Please...)

This morning's Agonist has a powerful piece showing how American households are in the worst financial shape since World War II. Considering the competence, selfishness and ideological mania of our national leadership, this should surprise no one. But it's laid out so well that I want to recommend that everyone read it in full and look at the charts as well. Briefly, consumer debt is doing American families in. A comparison of the total outstanding household mortgage debt with total household real estate holdings-- the leverage ratio that economists and financial people use to determine if a household has enough assets to cover all its liabilities-- shows that homeowner equity, which represents the amount a person actually owns in real estate, is at a post WWII record low.

"Household liquidity fell to a post-WWII low in the third quarter of 2006... Households already have borrowed so much that their level is at a post-WWII high. Secondly, households have already borrowed so much that their debt service burden is at a 25-year high. And thirdly, residential real estate which accounts for 30.5% of the total market value of households assets, is the single largest asset in households portfolios compared with deposits, credit market instruments, corporate equities and other tangible assets. Of these other asset categories, residential real estate probably is the least liquid. In sum, household have never been as highly leveraged as they are now or as illiquid as they are now, and their single largest asset is in danger of actually falling in value." In effect, we now have a record low in family assets to pay off debts... Households," he concludes, "have never been as highly levered as they are now or as illiquid as they are now, and their single largest asset is in danger of actually falling in value."