As usual, Peter put’s it into perspective…
So this week I’m going to have a look at what has been going on in America. I think the decade of 1999 to 2008 is going be one of the most popular case studies in future economic papers. An interesting time and a complicated time.
Currently in America there is a massive debt crisis, everyone has gone on a massive spending spree lately, racking up huge amounts of debt, buying lots of houses and now no one can afford their credit bills and everyone is defaulting. Right? WRONG! Here is the surprise – I was seriously expecting to see a surge about 5 years ago in consumer spending and debt in America, but it is not there! Consumer debt has been steadily rising, yes it might be getting to be too large a percentage of their income, but the rate of increase has been constant for over a decade. There has been no large jumps in consumer debt. Now I am going to say this in big bold letters – the current crisis in America is not due to a change in consumer behaviour! If anyone tries to accuse the man on the street of being irresponsible and causing the current crisis, they are wrong. The man on the street is doing nothing different.
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