Deeper in Debt
If both McDonald’s and Tiffany are reporting disappointing sales, you know we are in trouble. Pew Pesearch reports the lowest consumer confidence in 15 years. As the two charts above show, both the consumer and the country are going deeper in debt. Even upscale American Express card holders are having trouble.
At the same time, the number of overdue payments on American Express cards is surging, the company said — and this among well-heeled cardholders who charge up to $12,000 a year, on average, on each card. American Express has called some cardholders in the last few weeks to ask if they will have trouble paying their bills.
Paul Krugman puts out the notion this morning that the Edwards or Clinton economic stimulus plans could save us from recession. Talk about “false hopes!” The Times Floyd Norris and Peter Goodman are a bit more realistic.
But the forces menacing the economy, like the unraveling of the real estate market and high oil prices, are too entrenched to be swiftly dispatched by government largess or cheaper credit, some economists say.
“The question is not whether we will have a recession, but how deep and prolonged it will be,” said David Rosenberg, the chief North American economist at Merrill Lynch. “Even if the Fed’s moves are going to work, it will not show up until the later part of 2008 or 2009.”
As Barack Obama has said time and again, the American people are willing to embrace change, if only their politicians will talk straight to them. We are in an Interregnum, a transition from one kind of economy (easy money and no resource restrictions) to another (savings based to pay to rebuild our crumbling infrastructure). The transition may be painful, but we need to go through it to leave our children a decent future. Its called “Creative Destruction.”
Last year I was one of those $12K+ credit card people due to medical stuff that had to be paid for before the procedure occurred. We had enough in the bank to pay it off the next month, but this year is an entirely different story. Thankfully we have no mortgage or auto debt, but the medical bills from an emergency hospitlization in July? Still over $3K, and I pay a minimum of $500 a month on them. The worst part? I think I’m pretty darned lucky.