"He solemnly conjured me, I remember, to take warning by his fate; to observe that if a man had twenty pounds a -year for his income, and spent nineteen pounds nineteen shillings and sixpence, he would be happy, but that if he spent twenty pounds one he would be miserable." Charles Dickens, David Copperfield
consumers were over-leveraged, borrowing on credit cards and against their mortgages, buying homes they couldn't afford with zero per cent mortgages and cars with money they didn't have, driven by interests rates that were kept too low for too long.
In Canada, debt levels are still rising. Bankruptcies were up 36% in July.. More than half of Canadians say they are living pay cheque to pay cheque.
The unfortunate reality is that until households get their finances in order and are capable of spending again, the corporate sector won't rebound and neither will jobs. That's a healing process that could take years.
Tim Geitherner, Us Treasury Secretary: "Remember, this is a crisis born in part of the fact that households around the world in particular took on too much debt. So debt as a share of our economy rose to extraordinary high levels, and we're having a recession that is deeper in part because people are having to go back to living within their means. It means probably that you're going to see a slower recovery than we would normally see."