The credit addicts on CNBC have got to be flying as high as they’ve ever flown before. The minutes from the Federal Reserve’s last meeting were made public yesterday and Wall Street revelled in the implied monetary largesse like a pig in first-class gravy. The Fed didn’t promise more rate cuts. But it did say that that inflation is not as big a worry and that, “Further actions would depend on how economic prospects were affected by evolving market developments and by other factors”.
Allow us to translate the Fedspeak: “Blah blah blah blah. We’ll keep cutting rates until the Dow reaches 20,000. Blah blah blah blah. Do you feel rich now that your stocks have gone up? Good! Maybe you won’t notice the US dollar has become a third world currency and the housing market is a shambles. Blah blah blah. Thank you, you credulous moron. Blah.”
Aussie John is getting into the personal loan market. “Yesterday, [John] Symond announced Aussie’s entry into the AU$2.5 billion-a-month personal loan and car finance market, a move that some many consider down-market but others may see as a necessary step towards being a serious financial services house,” reports Anna French in the Australian.
Great. Just what people need. More debt. What’s next, throwing bricks at a drowning man?
Most of the big lenders in the States are in the auto and personal loan business, too. Who says feudalism needs castles and serfs and land to work? What you really need are lenders, borrowers, and a central bank willing to underwrite the enslavement of the people. Welcome to your credit servitude.
“Federal Reserve data released on Friday showed US consumer borrowing rising by US$12.18 (AU$14.2) billion in August, more than 20 per cent more than economists had forecast,” reports Reuters. Borrowing on high-interest revolving credit lines increased by over eight percent. It was the sharpest increase since 2002.
The downside to this news is obvious. Americans are borrowing on credit to pay for living expenses and assorted junk they could live without. Whether the borrowing is out of necessity or is instead some kind of compulsion to accumulate crap in order to feel more secure, we can’t say. But it is not a healthy trend.
Do you think there’s something to the idea that a nation can exhaust its creative energies? Or that nations go in life cycles… birth, youthful exuberance, rowdy adolescence, young adulthood, the prime, the decline, senility, and death? Is America past its prime? And where is Australia in the life cycle of nations? Just wondering…
Markets and Money
Do you think America is past its prime? How about Australia? Leave a comment below.