Re: What is the endgame for a spendthrift nation?

"Charles Quinn" <[EMAIL PROTECTED]> wrote in message
news:[EMAIL PROTECTED]
> In article <[EMAIL PROTECTED]>,
[EMAIL PROTECTED] (Andy) wrote:
> >In the 1 Dec 2003 NY Times there was an article title "Why Americans
> >Must Keep Spending; "
> >http://www.nytimes.com/2003/12/01/business/01econ.html
> >
> >The article describes how the depth of recent recession was moderated
> >by growth in consumer spending during the recession, and how the
> >recent economic recovery has been financed by even greater growth in
> >consumer spending.
> >
> >The article also says that this economy saving growth in consumer
> >spending has been financed *not* by increased earnings but instead by:
> > (1) people taking on more debt,
> > (2) and withdrawing equity from their homes by means of refinancings,
> >and
> > (3) tax cuts.
> >
> >The article asserts that consumers must keep up this spending growth
> >for the economy to keep growing.
> >
> >Given that tax cuts are just another form of borrowing (since the
> >budget is in deficit) this means that at present our economic health
> >depends on ever increasing borrowing to finance consumer spending.
> >What the article doesn't address is what the endgame is for this
> >scenario.  It seems obvious to me, though none of the experts are
> >addressing it, that a nation cannot successfully depend on increasing
> >consumer debt forever; at some point the minimum payments will be so
> >high that the consumers can't borrow any more.  Then the borrowing
> >will level off, and that will cause consumer spending to level off
> >and/or drop, and then the economy will go into a depression.  Or am I
> >missing something?
>
> Nope!
>
> Our nation is doing the same thing with our trade deficit.
>
> Of course we are increasing our spending on our military. It is larger
than
> the next ten nations with highest military spending.
>
Actually it's higher than the combined military of evrey nation on earth,
last I heard.

> We will eventually go TAKE what we want.
>
And the oil companies will divide it among themselves, leaving us with
nothing.
>
> --
>
> Charles
> The significant problems we face cannot be solved
> at the same level of thinking we were at when we
> created them.  Albert Einstein
>