How many more times can we ask the American middle class to save the world economy by going shopping?
The average personal credit card debt for a household is already $10,000. It’s not just sub-prime mortgages that are melting down; it’s good mortgages. Some homeowners now owe more on their homes than they can sell them for, and are heading toward foreclosure.
If every American gets $600 or more from the Easter Bunny this year, the smart ones will pay down their high-interest debt. The rest will buy more things, borrowing or charging the difference between their tax rebate and their new high-def TVs.
People who pay down their debt will be making the smartest use of a windfall, but they won’t stimulate the economy. Most Americans will rise to their patriotic duty, and make a major purchase that they can’t afford but have always wanted. It’s the American way.
Is the U.S economy ever going to get back to basics: investing in new plants, products and equipment instead of buying companies and moving money around? And will Americans relearn the quaint phrase their grandparents drilled into them: ”Always live within your means?”