America's borrower-industrial complex (A conservative details the risks)

[Roland99]

America's borrower-industrial complex
Commentary: A conservative details the risks
(Kevin Phillips' American Theocracy)
http://www.marketwatch.com/News/Story/Story.aspx?guid=%7BF7AC7D24%2D0259%2D4FC8%2D8744%2D0231319C9258%7D&siteid=mktw&dist=

One: The nation's global overreach, demonstrated by the so-far-unsuccessful invasion of Iraq.
Two: The surge of militant, fundamentalist, evangelical, right-wing religion in the U.S.
Three: America's ballooning debt, which has mortgaged the country's economic health to financial speculation.
The first two points are fascinating enough, but our column focuses on the economy, so what concerns us most is point three: those expanding debts. They may be worse than we imagine, much worse.

...

Indeed, household debt jumped from 50% of GDP in 1960 and 60% in 1980 to more than 95% at the end of 2005.

...

A substantial part of Washington's strategy, writes Phillips, has been to create a low-interest-rate boom in real estate, thereby raising the percentage of American home ownership, ballooning the price of homes and allowing householders to take out some of that price increase through low-cost financing. Through home-equity loans, owners turned their houses into ATM machines.

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This situation will only grow worse unless and until the U.S. changes some of its policies that promote over-consumption. Phillips warns that America's "performance in a broad range of areas -- including saving, education, energy and water conservation, critical infrastructure and workforce upskilling -- is far below the standard of many other nations. America needs to understand that its refusal to have a broad competitiveness policy is a policy. It is a policy that ultimately leads to impoverishment."

Sounds like this book is one of this year's MUST READS!

[DrGonzoLives]

1. This an oil speculation

will fuel the next depression. The real estate market can keep going higher, but there is going to be a point where it wrecks too many people who can no longer pay the mortgage, and it will collapse. As for oil, it can only stay this high for so long before triggering massive inflation (or massive rioting). Either way, for real estate or oil, things have to deflate soon, or things get very messy.

[Roland99]

2. Then there's the propping up of the markets and the Fed funding the debt.

[Roland99]

3. Kick for a good read.