Reply #64: Americans teetering on $14 trillion debt pile

[UpInArms]

http://www.reuters.com/article/GCA-CreditCrisis/idUSTRE4AD3A620081114

WASHINGTON (Reuters) - Free-spending U.S. consumers who bought everything from homes to groceries on borrowed money are running out of credit, and paying the bills will cost the world's biggest economy and its trading partners dearly.

The housing bust has exposed just how much Americans were relying on rising home values to pad spending and replace traditional savings. During the five-year real estate boom that ended in late 2006, household wealth expanded, retail sales grew faster than income, and savings dwindled.

But as banks restrict access to mortgages, auto loans and credit cards, consumers are altering their spending behavior so rapidly that companies cannot adjust fast enough.

Banks that eagerly handed out credit cards during the good times are reducing credit limits and setting asides billions of dollars to cover losses as customers miss payments.

U.S. automakers are warning of a near collapse in demand because would-be buyers are unable or unwilling to get loans.

Stores are bracing for the worst holiday season sales performance in at least 18 years.

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