Canary in the Mine: Household debt


In a sane world, the run-up in household leverage would have been universally greeted as a somewhat alarming trend. In the real world, however, the political right’s zeal to wave this issue away led most right-of-center folks to embrace the theory that consumption was all that mattered, so growing indebtedness was good. I think it’s wrong to say that we had the crash “because” of stagnating incomes, but the stagnation and the unwillingness of political elites to confront it was a key backdrop of the political economy of the crisis. It made it unthinkable and impossible for the people running the country to see what should have been an obviously problematic situation.

via Matthew Yglesias » Household Leverage and the Recession.