>There's plenty of talk - even here, on a nominally
>econ-centric dsicussion list! - about various discrete
>bubbles and overextensions: "innovative" financial
>products helping form a real estate bubble, runaway
>consumer/credit card debt, stratospheric energy costs.
>But how independent of one another are they? A recent
>Goldman Sachs research brief cited the 'over-leveraged
>consumer,' a character I find appearing with greater
>regularity - though almost always in passing note, as
>if his/her existence was widely understood and
>acknowledged. Shouldn't there have been a national
>dialog on this figure's emergence?
Well, it's pretty familiar to what a Merrill Lynch note the other day called "the economics community." But they're not independent. US foreign borrowing has gone mainly through the mortgage market and into the housing bubble (and home equity lines of credit). Americans are borrowing from the Peoples Bank of China to buy $500,000 bungalows and $3,000 TVs. Jim Paulsen thinks that's a great deal.
Doug