tag:blogger.com,1999:blog-7658874470833994309.post2025419681836976212..comments2023-10-20T10:46:21.208+01:00Comments on Knowing and Making: Borrow, borrow, borrowLeigh Caldwellhttp://www.blogger.com/profile/16150868700502562500noreply@blogger.comBlogger6125tag:blogger.com,1999:blog-7658874470833994309.post-58936743098897040112009-01-19T17:51:00.000+00:002009-01-19T17:51:00.000+00:00well, an indication of 'excessive' debt could poss...well, an indication of 'excessive' debt could possibly be 'excessively' risky behaviours as investors chase yield. covenant lite deals? mexican field workers with 750k mortgages? 125% mortgages?Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-7658874470833994309.post-38714289014126968862009-01-19T10:19:00.000+00:002009-01-19T10:19:00.000+00:00Debt used for consumption would be one example. D...Debt used for consumption would be one example. Debt that could never feasibly be repaid. These two are closely related. The problem has been caused by people who have been saying "deficits don't matter" to people, companies, institutions and governments that are already hugely indebted. Of course they do, unless you have no intention of paying back what you owe. The presumption has been Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-7658874470833994309.post-37648805550154641002009-01-19T10:18:00.000+00:002009-01-19T10:18:00.000+00:00Debt used for consumption would be one example. D...Debt used for consumption would be one example. Debt that could never feasibly be repaid. These two are closely related. The problem has been caused by people who have been saying "deficits don't matter" to people, companies, institutions and governments that are already hugely indebted. Of course they do, unless you have no intention of paying back what you owe. The presumption has been Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-7658874470833994309.post-80508635558385473182009-01-18T21:09:00.000+00:002009-01-18T21:09:00.000+00:00Now I'm no expert in finance but surely you see th...Now I'm no expert in finance but surely you see the debt had to be excessive; the lenders could not cover a fraction of risk they were taking.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-7658874470833994309.post-57645139901158432362009-01-18T20:57:00.000+00:002009-01-18T20:57:00.000+00:00But where is the evidence that the debt was "exces...But where is the evidence that the debt was "excessive"? That's my question. Just because it was higher than the long-run average doesn't mean it was excessive... lots of things are higher than their long-run average - like GDP or wages. It doesn't mean we should aim to cut them.Leigh Caldwellhttps://www.blogger.com/profile/16150868700502562500noreply@blogger.comtag:blogger.com,1999:blog-7658874470833994309.post-33767749632055689702009-01-18T20:55:00.000+00:002009-01-18T20:55:00.000+00:00Of course the recession was caused by a contractio...Of course the recession was caused by a contraction of lending! The build up of excessive debt was engendered by super low interest rates held for far too long. Any risk adverse banker was overwhelmed by the wall of cheap credit sloshing from his less choosy cousins. As mr prince said, when the musics playing, you have to dance..Anonymousnoreply@blogger.com