2011 October 23 Sunday
Few Chinese Americans Hold Non-Mortgage Debt?
If only the rest of the people in the United States could be so debt-averse.
COLUMBIA, Mo. – Bad mortgage loans and rampant consumer debt were two of the primary causes for the recent economic recession in the U.S. Despite a national trend of debt problems, a University of Missouri researcher has found one American population that holds almost no consumer debt outside of typical home mortgages. Rui Yao, an assistant professor of personal financial planning in the College of Human Environmental Sciences at the University of Missouri, found that while 72 percent of Chinese-American households hold a mortgage, only five percent of those households have outstanding auto loans, and only three percent have any other type of consumer debt.
The surveyed group has high average incomes.
In her study, Yao surveyed Chinese-American households in ten Midwestern cities. Income levels of participants ranged from $4,000 to $1.4 million annually with an average income of $106,000. She found that despite a low overall rate of debt, Chinese-American households with higher incomes were more likely to have some type of consumer debt.
If you click thru and read the full press release you'll see Yao would make to see Chinese Americans make more use of debt - i.e. owe more. She thinks this is needed in order to boost consumption demand. I'm not buying it. If all Americans became more averse to taking on debt we'd all be better off - except for the bankers.
So why this result? We'd need to see data on debt levels per generation among immigrant families to see if the children and grandchildren of Chinese immigrants take on more debt.
>"So why this result?"
Because "income levels of participants ranged from $4,000 to $1.4 million annually with an average income of $106,000"? That's more than double the national average income. If you looked at all American households with an yearly income of $106,000 then I expect they'd have a lot less debt than the national average.
In fact I just noticed that this is income data for Chinese-American households "in ten Midwestern cities". The Mid-West is a relatively cheaper part of America to live in, and a place where incomes tend to be lower than on the coasts. So that $106,000 average income is even more of an aberration.
If you click thru and read the full press release you'll see Yao would make to see Chinese Americans make more use of debt - i.e. owe more. She thinks this is needed in order to boost consumption demand.
Look to the right at Miss Yao's personal description and you will see that she is a graduate student. I think Miss Yao's favorable attitude towards debt indicates that she is being brainwashed by the university system.
I have no affiliation with the University of Missouri. But, they are more right more often than all the rest of the guys. Maybe there is something in the water? Hudson, Black, and Wray are some of the best economists anywhere. So, when somebody from Missouri, even a graduate student speaks, it is probably wise to listen. They have a first rate staff behind them. http://cas.umkc.edu/economics/people/faculty_and_staff.asp
The money system signals to people about how to behave and how to price goods and services. In other words, money should be a store of value, and a feedback system for capitalist economies. When the money itself is distorted, then even rational people cannot discern how to behave. Their economic nervous sytem itself is misfiring and presenting false information.
It would probably be more appropriate to blame economic rigging, such as Graham Leach Bliley act, derivitive players, AIG, and other malefactors; we shouldn't blame the sheeple who were programmed from birth to believe in the system.
First generation Chinese bring with them wetware formed in a different environment. I would bet second or third generation Chinese would not be so resistant to a money system that signals falshoods (like during a bubble). Even immigrant Vietnamese wear Jewlery as a form of portable wealth that lets them flee tyranny or upheaval at a moments notice.
In China and other communist countries, the money power and political power have merged into one. In our system, the money power is held by private banks (to issue credit money), and they in turn influence the political center. The money power via the credit mechanism is a confidence game, hence the need to insure credit money by hypothecation, or insurance. The ultimate insurance is to change the law to socialize banking risk. American's haven't caught on yet that our system at its root is unstable, as the credit mechanism itself is unlawful. But, some are slowly figuring it out. The facts on the ground today, are making many people wonder how we got here.