10-06-2008, 10:51 AM
<b>America's house of cards - make that, credit cards </b>
<!--QuoteBegin-->QUOTE<!--QuoteEBegin-->For the past decade, the American dream has been built on a house of cards - credit cards. But getting out of debt is far more excruciating than getting into it. "Deleveraging" is what it's called, and it's hard.
"The major institutions of the world all want to deleverage," says Warren Buffett. That means they're going to cut down on their lending. Credit card companies are deleveraging too, by clamping down on people's spending limits and bribing them to pay up. Businesses will be forced to deleverage by cutting costs and shedding jobs. How many? The U.S. unemployment rate is at a five-year high of 6.1 per cent. Mr. Buffett thinks it could go to 10 or 12 per cent. "As long as Americans remain at the end of their ropes, the American economy will continue to decline," writes Mr. Reich.<!--QuoteEnd--><!--QuoteEEnd-->
<!--QuoteBegin-->QUOTE<!--QuoteEBegin-->For the past decade, the American dream has been built on a house of cards - credit cards. But getting out of debt is far more excruciating than getting into it. "Deleveraging" is what it's called, and it's hard.
"The major institutions of the world all want to deleverage," says Warren Buffett. That means they're going to cut down on their lending. Credit card companies are deleveraging too, by clamping down on people's spending limits and bribing them to pay up. Businesses will be forced to deleverage by cutting costs and shedding jobs. How many? The U.S. unemployment rate is at a five-year high of 6.1 per cent. Mr. Buffett thinks it could go to 10 or 12 per cent. "As long as Americans remain at the end of their ropes, the American economy will continue to decline," writes Mr. Reich.<!--QuoteEnd--><!--QuoteEEnd-->