The Credit Collapse Opened the Door for Trump and Sanders

Sherle Schwenninger was quoted in Bloomberg about how the political effects of the credit collapse: 

Enter Donald Trump and Bernie Sanders.

Both presidential candidates have rattled the political establishment, in large part by appealing to blue-collar — and highly indebted — Americans with an “I understand your anger” type of message. “Debt is a big part of the political story,” said Sherle Schwenninger, co-author of a study of household borrowing by New America, a policy institute in Washington. “The debt overhang, the debt struggles, the debt traps,” he said, all form part of the “narratives on both the Democratic and Republican side.”

Of course, when viewed from a different angle, the result of all this deleveraging is an American consumer in better financial shape.

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Debt —and the ability to repay it — aren’t distributed equally. Especially after the subprime lending boom, the lower-income groups have the heaviest debt burden, according to New America’s study. That’s one reason deleveraging is weighing so much on the recovery. It takes cash away from the people most likely to spend it.

There’s “a day-to-day, week-to-week struggle of ‘How am I going to pay this bill or that bill?”’ Schwenninger said. And that fuels “a sense of desperation and anger.”