The problem high household debts when suddenlly increase in interest rate. More money need to feed bank and less money spend on eating out. Buy bananas etc etc

economy with less money to spend will cause recession.

but if interest rate drop. More money to spend which is good for economy but some family/Household will borrow more loan n futher increase household debts.

This post has been edited by tikaram: May 3 2014, 09:50 PM

Not calculated like that.

Household debt % = total household debt / GDP x 100%

few things I learn today.
1) Major bank in china is owned by gov. Only major and big corp can access to this banking, majority of sme and individual (including prop buyers) need to borrow from shadow banking ( also known as Ah Loong in M'sia). China gov will make sure the core banking system will not collapse.
2) Indonesia central bank has increased interest rate by 1.75% since last year, however, Thailand drop 0.5% (this % if not wrong) in the same period.
3) Although the unemployment rate in US has improved, but the jobs created are temporary or contract jobs. More quality jobs ie permanent jobs are required for long term substantiality. As a result, Feb need to postpone its plan to increase the interest rate. However, QE is ending soon, time to increase rate by then?
4) Market has adapted to the QE tapering. Share market no longer react negatively compare to its first announcement in May 2013.
5) Detroit may be bankrupt, but its residents actually have the lowest levels of debt in the country.

Juz to share ~

1st) household debt is very basic ~ I'm an IT/tech savvy guy, even i know that ~

2nd) household debt 86% meaning every household only has 14% disposable income

3rd) low disposable income -> less spending -> no business -> no companies -> no jobs -> no $$$ pay installment

u get the picture?

Gross domestic product (GDP) is the market value of all officially recognized final goods and services produced within a country in a year, or other given period of time. GDP per capita is often considered an indicator of a country's standard of living.

by taking household debts to GDP, what does it mean? 100% mean very bad?
If I apply the equation to my own household, will it be my total household debt over total household income per year?

with the definition of GDP, your 2nd point on 14% disposable income don't think is right.

The major problem is the high debts in society mean more money pay to bank monthly rather spend like buy banana which generate higher GDP when i grow more banana

high GDP good or low GDP good?

This post has been edited by tikaram: May 3 2014, 10:58 PM

Correct GDP is not equal personal income

GDP = market value

meaning all the products and services we produced ~ tats y we goto work to produce those ~


lets say market value 100% but actually 86% ~ u pinjam only ~ u belum pay ~


so u left oni 14% tat actually turn into income ~ where u can spend on GSC, LV, Samsung and Apple.


simple example ~

u make 100 cars ~

86 cars ppl said pay u by installment ~

oni 14 cars ppl pay u cash ~


so u oni have 14 cars cash ~ another 86 cars ~ u need to wait ~


i'm not expert in economy ~ this is juz my understanding ~



This post has been edited by zenjet: May 3 2014, 10:59 PM

but developer built the house (final goods) and sold to residents. Isn't it increase the GDP? GDP increase no good? GDP increase faster with debts or without debts?

the debts take years to pay back, 14% only correct if the debts need to pay back within 1 year and GDP refer to household income.
the car manufacturer get paid 100 cars when they produced and delivered.

This post has been edited by bcpbeancounter: May 3 2014, 11:01 PM

They use GDP to compare country to country. Malaysia household debt as a % of GDP is very high compare to our neighbours. So the financial risk is also higher compare to those countries. But usually the number is compare to savings as a % of GDP too. Malaysia gross savings as a % of GDP is quite high

Provided we all pay in cash n still have money to buy more banana

do you mean if pay via loan, the GDP lower? but developers get paid 100% (ignore the retention sum) when they provide VP.

no ~ the percentage is in real time, current household debt/current market value * 100%

it doesn't matter how long is ur loan tenure

But he dun conduct property speech

that's why we cannot just rely on 1 ratio and conclude that the debts is too low or too high. I think this ratio is just an indication, nothing much. if we are to take total debts over GDP, it will be few hundred % I guess as I think commercial debts are even higher compare to household debts.

yup ~ GDP is not personal income but is a "products & services" from everyone ~

which you need to sell them to get cash but if 86% of them is on loan ~ u oni get 14%

I understand this. but my point is 86% household debts to GDP does not mean 14% disposable income.

Developer collect money buy land. Buy bond. Shift to uk built battersea ma.

or money pay to bank by u n me not lend out in full to local ppl or company but to buy other bond in japan( lend to japan) ma.