Mr. Sunshine strikes again! Well I couldn't stay away for long, could I? How can you go on in life without your dose of dismal predictions and misery from this, your #1 FAVORITE blog? :) OK, here goes...
Read European bank bail-out could push EU into crisis
16.3 trillion euros. Now bear in mind the EU members' combined GDP for 2008 was US$19,195 billion, or US$19 trillion (see this). That's 14,723,100,000 euros by the current conversion rate, or about 14.7 trillion euros. So the EU collectively owes ((16.3/14.7) x 100)% of its GDP in 2008. That figure is 110.88%.
Imagine this for a minute as personal debt. Imagine you make $100k/yr. Now imagine you owe $111k in debt. And your assets, like a house or car? Let's assume you have assets but can't really sell them, as they are in trust. That's sort of the position the EU's institutions, as well as ours, are in, since the hard assets associated with the debts are either immovable or can't really be sold to pay off the banks' collective debts either because there are no buyers willing to buy or the banks can't or are not willing to sell the hard assets to raise money to do what-- pay off debts? That makes no sense when you need every scrap of whatever it is you have a claim to to keep you from going over the edge.
So you are $111k in debt and make $100k/yr. and owe payments on that debt. You have to make P&I payments at, say, an average of 10%. That's $11k/year in payments. But that is just for this one year's worth of debt. You also owe on past debts. Your actual total indebtedness goes back about 10 years, say, and you owe about that much in debt over the past 10 years. So your P&I is doubled to $22k/yr. That leaves you $78k/year to pay for housing and the rest of life, which if you have even one child, doesn't go nearly as far as it used to. And for giggles let's say you live someplace with a high cost of living. That'd be Europe, all right. You make that $100k in L.A. or NYC, not Rochester or Buffalo. Ouch.
Oh yeah, you have taxes, too. Just like the banks do.
I am sure it's worse than this. There has to be a load of crap I am not factoring in. But just imagine being just in this situation. People declare bankruptcy with lesser debt:equity ratios and get away with it. Or at least, they used to, anyway.
Read European bank bail-out could push EU into crisis
16.3 trillion euros. Now bear in mind the EU members' combined GDP for 2008 was US$19,195 billion, or US$19 trillion (see this). That's 14,723,100,000 euros by the current conversion rate, or about 14.7 trillion euros. So the EU collectively owes ((16.3/14.7) x 100)% of its GDP in 2008. That figure is 110.88%.
Imagine this for a minute as personal debt. Imagine you make $100k/yr. Now imagine you owe $111k in debt. And your assets, like a house or car? Let's assume you have assets but can't really sell them, as they are in trust. That's sort of the position the EU's institutions, as well as ours, are in, since the hard assets associated with the debts are either immovable or can't really be sold to pay off the banks' collective debts either because there are no buyers willing to buy or the banks can't or are not willing to sell the hard assets to raise money to do what-- pay off debts? That makes no sense when you need every scrap of whatever it is you have a claim to to keep you from going over the edge.
So you are $111k in debt and make $100k/yr. and owe payments on that debt. You have to make P&I payments at, say, an average of 10%. That's $11k/year in payments. But that is just for this one year's worth of debt. You also owe on past debts. Your actual total indebtedness goes back about 10 years, say, and you owe about that much in debt over the past 10 years. So your P&I is doubled to $22k/yr. That leaves you $78k/year to pay for housing and the rest of life, which if you have even one child, doesn't go nearly as far as it used to. And for giggles let's say you live someplace with a high cost of living. That'd be Europe, all right. You make that $100k in L.A. or NYC, not Rochester or Buffalo. Ouch.
Oh yeah, you have taxes, too. Just like the banks do.
I am sure it's worse than this. There has to be a load of crap I am not factoring in. But just imagine being just in this situation. People declare bankruptcy with lesser debt:equity ratios and get away with it. Or at least, they used to, anyway.
posted by Matt Campbell at 11:55 AM
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