During the middle of last year, Washington Post columnist Ezra Klein noted that rather than beating around the bush, he would call “what we’re in [now, in the US] a “household-debt crisis,” or something more elegant that gets the same idea across”.

The reason being that household debt to GDP ratio are dangerously high, banks aren’t lending, people aren’t spending, businesses aren’t growing, jobs aren’t being created and recession is giving us a sarcastic wink.

Perhaps as daunting is the growth industry of alternative lenders. What kind of household debt crisis awaits us if spending is only supported by rapid increases in borrowing from high-cost lenders, in a country where there is no law as yet to stop people borrowing over and over again, or borrowing to service other debts (roll over loans in other words). Continue reading →