We have heard all the common stories and explanations of what led to the Great Recession. However, Princeton University Professor Atif Mian and University of Chicago Booth School of Business Professor Amir Sufi recently published a book, House of Debt, which squarely places the blame elsewhere. They argue that policymakers are the ones to blame, but for a different reason than the one we have all been shouting about.
Mian and Sufi argue that “the Great Recession was the result of a sharp fall-off in consumption due to the unevenly accumulated household debt in the first six years of the 21st century….When the housing bubble popped, the economic consequences were sharply magnified by the way debt was distributed across households and communities.” Both authors argue the recession was avoidable if economists would have taken greater note of household debt and the pre-recession rise in lending to less credit strong households.
Read more here: Household debt and the recession
With this information, it is troubling to note that households are once again taking on debt at pre-recession levels. High interest debt is the most damaging and difficult to pay when a hardship hits. Contact an attorney who can help you eliminate credit card debt so that you can be on a road to a more stable financial future – regardless of what the economy is doing.