[Marxism] Patrick Bond on world financial volatility

Patrick Bond pbond at mail.ngo.za
Thu Dec 30 00:12:21 MST 2004


----- Original Message ----- 
From: "Jurriaan Bendien" <andromeda246 at hetnet.nl>
> But that really only suggests that debt levels become unsustainable for a 
> segment of the population (mainly,
> the lower-income group). Debt-driven accumulation could continue for quite 
> some time among those groups possessing significant assets...
>

Jurriaan, I don't see how you get from these two stats...

LIABILITIES
> Debt of all US households about $32 trillion (principally mortgage debt)

ASSETS
> Residential stock (mainly housing) $11.6 trillion

to this conclusion, especially if the negative equity problem hits with 
anything like the force it did fifteen years ago, and fifteen years before 
that (yes, it's the Kuznets property cycle time again...):

> So it looks to me like debt-driven accumulation can continue for quite 
> some time yet; it's just that some social classes will be "squeezed" more, 
> and then will be less able to spend very much.

We're talking about an immense debt/property overhang, reaching far into the 
middle-classes, not just low-income people scraping by. Even The Economist 
mentioned last year that with global real estate valued at around $70 
trillion, roughly $40 trillion was merely paper wealth.

It's a global problem, with roughly the same proportions of property 
speculation and debt here in South Africa. If the search for collateral 
begins in earnest amid a widescale property shake-out, we'll all be learning 
lessons from 'El Barzon,' the mid-1990s Mexican movement of several million 
debtors against bankers.





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