Chapter 10
Western Crisis: Three Major Factors
The Western crisis of 2008–2009, the worst since the Great Depression, can be explained by three major factors.
Unaffordable Consumption and Households Deeper in Debt
First, it was the crisis of consumption patterns and lifestyles. Many Western households had tiny savings and accumulated debts that were too big. Americans and Europeans have to ask themselves a simple, but very basic question: Are we living right? Are our lifestyles financially sustainable?
Not all Western countries are similar in this regard. The United States is the most typical example of biased and adventurous consumption. Countries like Germany and Switzerland represent another pole.
R. Weagley presents unique comparative data on the consumer finances in China and the United States (Weagley 2010). The data on China are based on the results of the survey of more than 2,000 urban Chinese households residing in class-one and class-two cities, conducted by the Tsinghua University.
Converted to dollars, the average annual household income of the Chinese families surveyed was $10,220 as opposed to the $84,300 average for U.S. households. In both China and the United States, the average family assets were about eight times its average income. However, the average U.S. household’s debt comprised 136 percent of its income, while the average ratio for a Chinese family was no more than 17 percent.
Out of the Chinese families surveyed, 85 percent owned a home, but only 11 ...
