The end

Now I am about to talk economics kids but I promise to throw in enough fire and brimstone and cataclismic apocalypses to make it sound as interesting as Today Tonight at least.

An online news site that tends to focus on economic stuff ran an article a while back about the take up of credit cards in Australia. The owners of credit cards have been increasingly steadily lately but the use of credit has been increasing exponentially which means everybody is a lot more in debt. I mentioned this on my blog.

Now a growth period fuelled by debt is not a good thing because there are limits to debt, assuming that lenders actually expect to get their money back from you at some stage. And if the whole country is relying on increasing debt make the economy go round sooner or later you're going to hit what Tour de France types call The Wall when there's just nothing left to spend. I thought this might just be my ignorant pet-theory about an Australian doomsday (aka recession) but this website is also contemplating "something dire". Read the quote below for details. The really concerning question though is will this happen before the election and destroy John Howard or will it happen after a Labour win and ensure a quick, one-term return for satan's own political representatives?

Henry, 25/7. A Goldmember has questioned the standard paradigm that "all will be well" (eg Alan Greenspan). He writes: "I am getting very nervous on global stock markets,– right now they have a bad feel and I get the sense that people in the market that have experienced more than one business cycle are getting more than a bit nervous. They are not so worried about the Middle East and the oil price but more concerned about the issues raised in you recent Page 1 article in the Australian. I have a friend, Andrew, who is a professional photographer that runs a bunch of training courses in the evenings and most weekends. What he is finding is that punters are canceling doing courses. This is because they have no more credit left on their cards. Andrew remarked to me yesterday that trend said it all, and he no doubt right. The day of reckoning in the UK, US and here might be closer than we all think. I think that the overall market also senses something dire."

Another knowledgable person yesterday said the "ladies who lunch" in Sydney's eastern suburbs are spending a lot less - eg on facial massages at $200 a throw.

Also, US retail has "hit the wall" - and a well-connected visitor from the UK reported last night that, in Boston, antique sales have dried up.

Source: http://www.henrythornton.com/article.asp?article_id=2721

james

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