> I think the real indicator here is default and bankruptcy, not how
> much debt people take on. Debt isn't a priori 'bad' or 'good' --
> it's just an exchange of risk. For many people, exchanging a
> mortgage for a house that is their's is "worth it" -- despite the
> higher net cost of the house over time. The same can be said of
> autos, on down the line to big screen TVs in time for the Super
> Bowl. Borrowing to buy a high-flying stock can also have it's
> rewards, as (like we saw last week on this list) can getting student
> loans, gambling that your increase in credentialed schooling will
> give you a better life in some unspecified way.
Debt isn't just the exchange of existing risk, is it? It's the creation of additional risk.
Suppose you have enough money to buy one item or the down payment on three (assume the cost of each is the same). Going into debt gets you the three, but adds aditional risk--a claim on future income--that you wouldn't have if you bought only the one.
So, yes, debt isn't per se good or bad. Whether the decision in the above example is good or bad--either way--depends on the relationship betwen risk and reward.
RO