Check this out: "May Consumer Borrowing Jumps 6.4%"
Now, if you lived in a world in which self-governance and spending within one's means mattered, this would be alarming news. But consider some of the editorial commentary embedded in this article:
"The size of the increase was nearly double what economists had been forecasting, although they were looking for a rebound from the sluggish performance in May, when the 1.1 percent rise in overall credit was the smallest gain since a 0.1 percent rise in October."
Sluggish performance - that's BAD!! Good thing we kicked it up a notch!! Thank goodness for this "rebound"!! That's some "gain"!! Way to go, consumers!!
"The report on consumer borrowing will provide support for the view that consumer spending has held up, despite the weakness in home sales and soaring gasoline prices during the spring."
Spend, buy, consume! - even though you don't have the dough!! So long as consumer borrowing "has held up," we should be fine!!
So, in order that our "economy" keeps growing - or, to be more specific, that we continue to consume (for, after all, we are "consumers") - these economists are encouraged to see that their fellow citizens have increased their debt "by $12.9 billion to a record level of $2.44 trillion." This represents growth, after all, and as we know, growth is good. Ergo, more debt means more purchases, which means more growth, which means all is well.
But, how do we square all the excitement among the economists with this nugget:
"David Wyss, chief economist at Standard & Poor's in New York, said some of the surge in credit card debt reflects the fact that it is getting harder to get home equity loans with banks tightening up on standards and home values not soaring as they did during the housing boom. 'We think that people who had been refinancing their credit card debt into home equity loans are finding that harder to do now,' Wyss said."
The fact that people have less "net worth" in the form of inflated housing prices means NOT that we cut back, but instead that "consumers brushed off rising gasoline prices to storm the malls" using credit cards that charge in the area of 18-25% interest (assuming sound credit - 30% and up if you have some blemishes). How are we going to pay off this debt? Well, by more growth, of course! But, if growth is now occuring through borrowing at usurious rates, how will we be growing our way out of our debt? I know! We'll keep our economy afloat by selling some bonds to the Chinese! More growth!! Then we'll be able to buy more plastic crap made in China! And as a result, our trade deficit will grow, too - a new record, 26.9 Billion in one month! More growth!! Growth, growth, growth, everywhere the eye can see!! Records falling, left and right!!
I'm told from time to time that Economics is the only truly scientific science of the social sciences. Based on what I continue to read, however, I can't help concluding that the discipline is nothing more than faith-based hogwash. George Bush the First had it right all those years ago - what we've got here is a case of voodoo economics. But, I suppose you can't say that anymore, since it probably would offend Voodooists (not to mention fans of Ronald Reagan, under whose leadership we became a nation of debtors). Sorry about that. Go back to sticking pins into protectionists.