WHERE HAVE ALL THE SAVERS GONE?

4/29/09

One of the eminent “experts” (whose name I didn’t catch; I was in the car and, unlike 99% of Americans, or at least 99% of the Americans I encounter on the road, I prefer to concentrate on driving when I am behind the wheel and hence didn’t write down this notable’s name, and I had more important things to hold in the increasingly limited space in my memory.) on CNBC this morning, commenting on this morning’s unexpectedly strong consumer spending numbers in an otherwise generally dismal GDP report (Yes, I know those inventories are just going to snap back and everything is going to be wonderful in the Fall. Pass me that kool-aid, will ya?), said (I can’t quote, but I can paraphrase):

The good news is that as soon as consumers get money, they spend it.

He went on to say that the U.S. personal savings rate, which is now at about 5% (The Chinese savings rate is at least four times as high. The comparison is not very apt; given our different stages of development, no one expects the U.S. savings rate to be as high as the Chinese saving rate. But 5% is by no means a large or onerous savings rate.), should now stabilize or drop. This was, according to this wise man, even more good news.

Hmm…

Meanwhile, the government is going to borrow over $1 trillion per year for the next few years, but obviously not from us. Let’s hope our friends (soon to be our masters) in Asia are in their usual magnanimous mood and/or that a fuse doesn’t blow on the printing presses at the Fed.

This economic downturn, the result of the bills finally coming due on twenty years of financial profligacy, presented our once great nation a golden opportunity to come to terms with the irresponsibility that landed us in this slop in the first place and to return to the thrifty ways of our ancestors that enabled us to build the capital base that made this country the world’s foremost economic power. Instead, we chose the hair of the dog of more spending in order to “solve” our economic “problem.”

When will we ever learn?