With stock markets around the globe hitting the wall, literally, with a resounding bang, talk of a recession in the US, the US Fed. cutting the interest rate by .75% [in an effort to staunch the red-ink flowing on Wall St. and settle the nerves of both investors and home owners in America] and the grave uncertainty about the economies in many countries, it is timely to reflect on how all of this has come about.
Greed has obviously played its part - as financiers have dangled ever-more cash in front of people unable to afford the loans being offered. A mirage of ever-increasing property values has been another issue. And then there has been spiralling household debt. The credit-card "charge" has gone on unabated and unchecked. Until now!
Roger Cohen, columnist in the IHT and NY Times, puts the whole mess into some context in a well-put together and well-worth reading piece "U.S. Soldiers and Shoppers Hit the Wall":
"Wars in Afghanistan and Iraq have pushed the U.S. armed forces to the limit. Many soldiers have scarcely seen their families in recent years. But a much larger American army, the one that's spent this century shopping, is even more overextended and its pain is now coming home to roost.
Nobody ever made money exhorting people to save. But U.S. banks and financial institutions have spent huge amounts in recent years telling people debt is good and savings are dumb.
Their ads - to the effect that "good daughters go into debt to take their mothers on vacation," as Elizabeth Warren, a Harvard law professor, put it - paid off handsomely as consumers went on a debt-financed shopping spree. Consumption has driven the U.S. economy; the only problem is consumers ran out of money years ago even as they did not run out of credit cards.
And here we are, with the rainy day our grandparents always droned on about appearing in the form of a deluge, and no savings stashed for it, and President George W. Bush, the debt-spender par excellence, conjuring up a $150-billion stimulus package that evokes the injection of steroids into a prone athlete wrecked by a marathon."
Greed has obviously played its part - as financiers have dangled ever-more cash in front of people unable to afford the loans being offered. A mirage of ever-increasing property values has been another issue. And then there has been spiralling household debt. The credit-card "charge" has gone on unabated and unchecked. Until now!
Roger Cohen, columnist in the IHT and NY Times, puts the whole mess into some context in a well-put together and well-worth reading piece "U.S. Soldiers and Shoppers Hit the Wall":
"Wars in Afghanistan and Iraq have pushed the U.S. armed forces to the limit. Many soldiers have scarcely seen their families in recent years. But a much larger American army, the one that's spent this century shopping, is even more overextended and its pain is now coming home to roost.
Nobody ever made money exhorting people to save. But U.S. banks and financial institutions have spent huge amounts in recent years telling people debt is good and savings are dumb.
Their ads - to the effect that "good daughters go into debt to take their mothers on vacation," as Elizabeth Warren, a Harvard law professor, put it - paid off handsomely as consumers went on a debt-financed shopping spree. Consumption has driven the U.S. economy; the only problem is consumers ran out of money years ago even as they did not run out of credit cards.
And here we are, with the rainy day our grandparents always droned on about appearing in the form of a deluge, and no savings stashed for it, and President George W. Bush, the debt-spender par excellence, conjuring up a $150-billion stimulus package that evokes the injection of steroids into a prone athlete wrecked by a marathon."
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