We Are Officially a Sub-Prime Nation

Matt Welch | January 9, 2009

That is, according to the FICO-score calculators over at the Credit Loan blog.

If Uncle Sam wanted to buy a house, he would get a rate of 7.836% for a 30 Year Fixed rate.

The main downward pressure our credit rating?

[T]he government owes almost four times its yearly take. Compare that to your own debt level and you can see why this looks insurmountable.

Link via Instapundit.

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Comments

|1.9.09 @ 8:19AM|#

Wow, now why am I not surprised by this!

Jess
www.privacy-tools.at.tc

The Extispicator|1.9.09 @ 8:21AM|#

If Uncle Sam wants to buy a house, he will do as he always does: just take it.

Even if he does want to buy it, he'll just call his nephew and get down payment assistance or wait for there to be a program to help subprime borrowers get lower rates.

ed|1.9.09 @ 8:26AM|#

I'm thinking now's the time to start learning Mandarin.

|1.9.09 @ 9:01AM|#

Are you suggesting that economics applies the same to individuals as well as countries? That sounds...Austrian. (And sensible.)

|1.9.09 @ 9:28AM|#

"I'm thinking now's the time to start learning Mandarin."

Mandarin's a hard language; we should have started years ago. Hindi is also another one we should learn, because in 10 or 15 years, the US will be grateful for the cheap manufacturing jobs the world leaders -- India and China -- send us. Well, at least it'll put the kids to work again.

|1.9.09 @ 9:35AM|#

it'll put the kids to work again.

Coal mines are a good substitute for universal public education daycare.

Kolohe|1.9.09 @ 9:35AM|#

This is cute, but two things:

I would think the mortgage rate with that FICO should be higher, as a jumbo loan would be required: a big house is needed with him having something like 100 million kids, and he lives in one of the more expensive neighborhoods on planet earth.

They say it's very bad that total debt is four times the yearly intake. Putting aside whether or not GDP vs tax collections are really the nation's 'income', having a debt load of 4x income is only bad if it's all *consumer* debt. A newly purchased house plus some student loans could easily make one's total debt load 4x income - it would be a bit on the high side, but not necessarily 'very bad'

|1.9.09 @ 9:44AM|#

A newly purchased house plus some student loans could easily make one's total debt load 4x income - it would be a bit on the high side, but not necessarily 'very bad'

Sure it is. 3x annual income for all debt should be anyone's limit. I'm at about 1.3x annual income, and it makes me itchy.

Have we learned nothing?

冉爽慷|1.9.09 @ 9:54AM|#

I'm thinking now's the time to start learning Mandarin.

Best of luck. It's like trying to speak in bird-calls, and every word has about 17 meanings depending on how it's used. But don't worry - China is hurting even worse than we are. Factories are closing, small businesses are folding. Guess who buys the lion's share of China's exports? That's right. When we don't have any money, neither do the Chinese.

|1.9.09 @ 10:00AM|#

A newly purchased house plus some student loans could easily make one's total debt load 4x income - it would be a bit on the high side, but not necessarily 'very bad'

It wasn't "very bad" in 2003, but now it is.

robc|1.9.09 @ 10:05AM|#

having a debt load of 4x income is only bad if it's all *consumer* debt

Not true. Even if it is all at 6%, for example, that requires 24% of your income just to pay the interest.

creech|1.9.09 @ 10:06AM|#

A debt load three times annual income may be problematic for us ordinary folks. But then we don't have legal access to men with guns or to men with printing presses who can increase our incomes to cover whatever debt we run up.

Uncle Sam Giancana|1.9.09 @ 10:35AM|#

But then we don't have legal access to men with guns or to men with printing presses who can increase our incomes to cover whatever debt we run up.

Speak for yourself.

|1.9.09 @ 10:58AM|#

Well, if we're subprime, I say we abandon the house and let the bank foreclose upon it. We can go exercise adverse possession on, say, Europe.

Hey, Mom and Dad! We're back! And we're taking the master bedroom.

Stormy Dragon|1.9.09 @ 11:06AM|#

To be comprarable to an individual credit score, should the country's debt load be calculated as a percentage of tax revenue, GDP, or of the total economic value of the country? I can see arguments for all three.

T|1.9.09 @ 12:05PM|#

But then we don't have legal access to men with guns or to men with printing presses who can increase our incomes to cover whatever debt we run up.

Sure you do! Just don't get caught at it. Of course, then your housing issues will be solved for a few years. It's a win-win, innit?

|1.9.09 @ 12:49PM|#

This is what I've been thinking. It's nonsense that credit is "frozen". I'm still getting credit card offering in the mail. Because my credit rating is excellent.

The problem is not that the banks don't want to lend, it's that most Americans these days have shitty credit ratings, so they wouldn't qualify for loans under normal (as opposed to insane-reckless-bubble) circumstances.

Taktix®|1.9.09 @ 2:05PM|#

[T]he government owes almost four times its yearly take. Compare that to your own debt level and you can see why this looks insurmountable.

Ha! They say that like they're spending real money...