All Debts are Not Created Equal
Steven Taylor excerpts and comments upon a column noting that Alan Greenspan has changed his view on the impact of debt on the economy, noting in particular that the exponential growth in mortgage debt is quite positive.
I certainly agree. Buying a home is an investment and thus “good” debt. It should certainly be thought of differently than, say, buying a plasma screen TV on a high interest credit card.
Well, yeah, but everyone knows that. Don’t they? You know, like all the things *everyone* knows.
Actually, a mortgage is only good debt when a house is an appreciating asset. This depends on immigration and population politics. Long-term mortgages are much less good in Spain, Italy, or France. If something doesn’t change, mortgages will become the same as the plasma TV, a purchase, at interest, of a depreciating asset.
True enough; I’m thinking of the U.S. context–where you not only build equity through appreciation but also get the substantial tax write-off.
The difference is, they ARE making more TVs.