Econo-Girl is finally doing what she should have done from the beginning. She is looking elsewhere for a job. Her goal is to join the capitalist wilderness as a beast of the night. That is the long run. For now, she is going to be an employee.

So Great Britain is going to lower their interest rates. This is interesting and maybe a warning to us all. The Economist had a great article on how consumer demand was flat in Britain and lowering the interest rate would spur demand. And then the article asked, what about when the same thing happens in the US?

That is indeed the question. When US consumers no longer feel rich from their house prices, they won't spend. Or when all those credit card bills come due. It is all going to hit the fan some time. Then consumer demand will fall, and then what? It is the US consumer that is floating the world economy. We are the only ones really buying what the rest of the world is making.

But what The Economist doesn't address is how invested EVERYONE is in continuing the balance the way it is: the US consumer borrowing money from overseas to pay for stuff that otherwise would not be bought. No one else is buying right now. It isn't the European consumers, for sure.

Until the Next Big Thing comes along, this debting thing may continue for a while. When the US consumer starts to live within their means, it will trigger a global recession.

We truly live in interesting times.

1 comment:

The Lazy Iguana said...

I know I am not rich. This makes me feel bad, so I buy stuff.

But I work for the government now. At the airport. The County's piggy bank.

And today, I bought a new handheld marine radio. $50. I am weak.