America Faces The Music

Fareed Zakaria, 20 Oct 2008 - "Two decades of easy money and innovative financial products meant that virtually anyone could borrow any amount of money for any purpose. If we wanted a bigger house, a better TV or a faster car, and we didn't actually have the money to pay for it, no problem. We put it on a credit card, took out a massive mortgage and financed our fantasies. As the fantasies grew, so did household debt, from $680 billion in 1974 to $14 trillion today. The total has doubled in just the past seven years. The average household owns 13 credit cards, and 40 percent of them carry a balance, up from 6 percent in 1970."

America's Credit Card Bubble

Looks like the next thing to burst will be America's credit card bubble. With the combination of unprecedented levels of credit extended by banks (freely given without verification) and the average Joe's inability to live within his means, another perfect storm is brewing. It takes two hands to clap (a cliche, but too true in this case). The greedy banks give out credit lines and credit cards like candy, probably assuming a government bailout if things go belly-up. And there's the American consumer, who only knows how to consume. What happened to buying a car with cash (too few Americans do that)?

Mumbai Attack

If we consider the worst outcome imaginable for this terrorist attack, we may yet deny them satisfaction. I would say that the worst-case scenario is war between India and Pakistan, involving nuclear weapons. I have a suspicion this is what the terrorists were aiming for. For that very reason, Pakistan has to go all out to cooperate with India. War must be avoided at all costs. These terrorists have lost touch with humanity and think nothing of the millions of innocent lives that would be lost.