Consumer Credit Has Fallen Off a Cliff
The NYT continues:Highly recommended.
“For the first eight months of the year, the United States trade deficit with China is down by about 14 percent or $20 billion, compared with one year ago. The nation’s trade deficit with Japan has shrunk by almost 20 percent, and its deficits with Mexico, Canada and the European Union are down more than 40 percent.
“The huge shift stems mainly from the staggering collapse in trade. With credit markets frozen and Americans facing the highest unemployment in more than 30 years, the United States suddenly stopped shopping overseas at anywhere near the volumes that had become normal.”
Americans were the world’s champion consumers. Just lend them money; they’d spend it. But when they stop spending it brings a hush to the entire planet. The malls go quiet…trucks slow down…ships are idled…and finally factories are shut down. Clerks, drivers, stevedores and assembly line workers all go home. That is what a depression is all about.
The feds are trying to get consumers to spend again. They’ve given them tax rebates, incentives, loans, and bribes. They’ve run a federal deficit three times higher than the previous record. They promise $1 trillion deficits “as far as the eye can see.” And they put at risk a sum of money equal almost to the entire US GDP.