Quote:
Originally Posted by pocketkangaroo
What does that have to do with employment and being able to spend money to buy things?
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PK.. What sustains any economy??
Because there is an inordinate ability to consume till ya drop and where this is based on claims of "employment" and purchasing ability, does not exactly relate to some "good life" scenario - at least in this instance.
It's fine on the short term as long as there is an underlying core of "wealth" or the prospect of earning that wealth. Reality is, overall, that employment rate does very little for USA Inc (but certainly helpful for folks earning).
Employment is predominately in domestic service industries, not in any wealth-creating manufacturing scenarios. Only 10% of the total of all US economic activity relates to manufacturing. This, in turn, means there is little prospect of recovering from the largest debt ever by exporting product and earning "real money".
At the same time - and on an individual basis, folks are spending 160% of their wage packets in malls. Again - unsustainable and stepping into a sea awash in personal debt. On a national level it means more baggage/debt when that imported consumption has to be paid by weak dollar values.
Spending ability is eventually controlled by an ability to pay, both on a national and personal level. It starts with more loans and, least in my 2 cents, takes longer for the rot to set in than ya would expect. OIU's for these loans are already being issued at unprecendented levels by the Fed (and card companies). Along with that are the credit cards being maxed (they aleady are), both on personal/national levels - the exuberance starts to cool.
This is not some scenario involving much more than common sense - it existed since whenever. When it reaches a stage of borrowing massive amounts from "third world countries" to hopefully sustain economic activity - there sure is a problem.
Bet ya... 12 months from now we will see a deterioration, tho may still then be a minor one in relation to things yet to come. The dollar will be even weaker, the loans bigger - and, like all good cocktail parties, folks deep in card debt will be proclaiming how much equity they have in their homes
