The New Raw Deal

It is no secret that the economic growth and bubbles since the mid nineties until today were financed with north-american consumers money. These revved up the economic engine of the world.

They are leveraged out. Their savings rate was until recently virtually nil. Their debt level was not healthy. Banks became creative to continue lending to keep the ball rolling until hell broke lose.

Now the bottom line question is who is the next group to foot the next economic expansion bill?

China's growth depends on somebody else's expenditures. Europe has another set of problems: demographics, high unemployment, slow recoveries, etc. The rest of Asia?

Geithner's warns of more economic pain ahead for USA, specially in the job market. The most flexible and dynamic job market is going to be dragged down even worse. The average/median salary is going to fall more.

So the natural question to follow would: is the north-american consumer going to save and reduce their leverage or expend to make corporations rich before their jobs are outsourced or the federal government bails the business out?

Interesting questions for lenders, borrowers, and policy makers.