How Much Debt Is Too Much Debt?

https://www.project-syndicate.org/commentary/rising-debt-unfounded-fears-by-robert-skidelsky-2016-01

Good Question.  Beyond the title I can't say too much about how the author replies with an answer.  From which and whose perspective?  Whose perspective from two difference standpoints.  One being the owner of the asset side of the balance sheet debt.  The other being the owner of the liability side of the balance sheet debt.

Good question but in the standard style of such a significant question it beats around the bush and fails to scare up a real answer to the question.

The answer is really for whom does the answer have the greatest meaning.  I see it as the holder of debt as their asset to whom payment is required by contract.  The entity owing the debt may for various reasons, maybe the principal one simply being that they have to much total debt and must tell those they owe money to in order of priority to go pound sand.  The last to be told that will probably be the one that will pound them for non-payment or cut off body parts for each increment of debt owed.  That is the unwritten but understood part of the those debt contracts and it is not in the small print but write large.

How much debt is too much debt from the standpoint of the entity to whom the debt is owed?  Too much when it kills or cooks the goose laying those golden repayment eggs.  So a single goose gets killed to send a message.  When too much is owed by all the geese in the yard that can't cover the cost plus profit of loans to them then that is too much debt for the collector of those golden eggs.

Unless......they can get the protector of the hen house to make payment to the fox on behalf of the geese.  Then the protector extracts whatever was paid to the fox from the geese.

Does that situation begin to approach the level of having too much debt?

Debt is only one of the children of a bigger parent concept called "Risk and Reward" that inherits attributes, methods and messages to implement its methods communicating with a wide variety of related entities that are all connected in the Problem Domain of "Debt" that is a child of a greater Parent Domain of Risk and Reward. 

Life is a high level Problem Domain that relates at that higher level with the Problem Domain of Risk and Reward.  We are direct high level Children of Life.  Financial Debt is a several steps down the generational line as a sectoral child of Risk and Reward.  Children of each domain and their children interact.   When breaking limits are reached they are resolved at higher levels.   At the highest level Debt (which is a lower level child of Risk and Reward) raises in importance to the highest level in relation to Life.

The Parent level of both Risk and Reward and Life??????

Go Figure!  It ups the stakes and the ante to the highest level parent for ultimate settlement doesn't it?  At the granular level.  At the aggregate level.  Final resolution.  The system must be fundamentally restructured so that is not possible.

Too much debt is when the collector of the debt no longer is in league with the protector of the debtors and the collector chokes on the debt that is owed, jumps out a window or swings to a different tune when it no longer calls the steps.

Too much debt owed by the debtor?  The answer is equally applicable at the granular as well as the systemic aggregate level.

The problem is the debt money finance system.   A system in which "Big Debt" finance contracts are paid off in the same currency medium created by the contract.  The same currency medium that is overwhelmingly used to pay off small debt.  Most often the kind where debt settlement is made immediately in real time by cash, physical or digital, currency.  The same currency that also pays off Big Debt over a long period of time.

Little debt matters used to be Retail Consumer Commercial Banking.

Big debt matters used to be Wholesale Finance banking.

Glass-Steagall stuff.

It is not so much a question of too much debt but the category of the debt.  When it is all the same with no division between its fundamental nature, magnitude and application then all debt is the same.  When it is categorized and managed independently then the answer becomes more precise.

Otherwise the answer is........

As much as possible for me without killing thee........or having thee kill me.

That works for me to the extent that I have protection from thee  and thee not from me.

It is the business model of a crook:  What can I get away with?

The best of all worlds for the crooks business model is that the victim does not know they have been victimized.  If they do there is nothing they can do about it without the whatever they might be able to do is worse for them than the crook.  Kind of like reporting a crime to the police and they come to shoot the one that reported it.

Does that happen?  It sends a message.  Kill too many and the message gets effectively returned.

That is when how much is too much.

Goldman is good at protecting itself from the ravages that it might suffer from Risk and Reward and its financial debt child.  Keep it down at a low level and own the entity that would otherwise settle it at a higher level approaching the Life level of its granular and aggregated citizens that is the Parent to the their child called Government.

http://www.nytimes.com/2016/01/31/business/case-sheds-light-on-goldmans-role-as-lender-in-short-sales.html

Bill Black has proposals for solving debt crime at a high Parent Problem Class Level.

http://neweconomicperspectives.org/2016/01/announcing-bank-whistleblowers-groups-initial-proposals.html

http://www.nakedcapitalism.com/2016/02/the-bank-whistleblowers-united-who-are-we-and-why-are-we-trying-to-help-implement-real-banking-reform.html

Essentially it balances granular level power of a Whistle Blower to exercise Risk and Reward attributes equal to the aggregate level power of Big Banks to manipulate Risk and Reward with a crooked institutional business model.

Oh for the days when a cheater with an Ace up its sleeve rose quickly to the top level of Life and Death.