Households cause balance sheet problems

Households seem to be causing the problem with our overall balance sheet.

The world’s economic difficulties arise because so many balance sheets are badly balanced. A balance sheet – of a person, a business, a financial institution, a government or a country – consists of the entity’s assets on the left and its liabilities on the right. (Accountants are such a conservative profession, I doubt they are making an implicit political statement.)

Assets and liabilities are rarely equal. If the assets exceed liabilities, an item called equity appears in the balance sheet. If...

This article appears in the New Zealand Listener issue October 1, 2011.
The full text of the online article will be available on October 10, 2011.
Subscribe to The Listener online.