Washington Post,Business F1,5 March 23, 2008

Easter is a movable feast and economics is in a state of flux with problems of fluid liquidity(sic)to describe the state of the economy today!
Americans are carrying $2.5 trillion in non-mortgage debt. Consumer debt excluding loans backed by real estate, has nearly doubled in the past. Financing cars for three years is so passe(outmoded); we finance them for six or seven. And now we buy houses with pick your payment mortgages. We are leveraged from here to China. U.S. consumers spend more than 14% of their after-tax income just to stay current on household debt. Why do we love leverage so much that it hurts? The answer is that we want more money more house, more car, just more, more, more. We often think we deserve more. Leverage gets us more. With historically low interest rates, leverage is the easiest and quickest tool to get more stuff. Should we blame our brains?

Americans spent 10.8% of their after-tax money on servicing debt back in 1982, when the federal funds rate was 14.5%. But as interest rates declined, making money cheaper, our debt- and the amount we pay to stay current - shot up peaking in 2006, when interst rates were at 5.3%. Mark Zandi ,chief economist of Moody's Economy.com said:"Like any other product, it its price falls, households will consumer more of it." "Rates fall, so households take on more debt." My comment: When FED reduces the interest rate down further to try to avoid recession,the amount of debt would be increasing to rekindle inflation. That is stagflation as I sent my blogs in the past to reinforce such rationale. Jason Zweig said:"The only way we will change from a borrowing and spending society to a savings society is if people can motivate themselves to think concretely about the future. But it doesn't come naturally. That is a muscle you have to buld up with exercise.(sic)? My comment: "Enjoy now and pay later" has been the busswords for decades and it is difficult or impossible to change the lifestyle of folks in the USA. I trust that the readers would be able to envision US-China relations in a mutually interwoven link in the 21st century with insights! Thanks for reading such analytical observations in a nutshell.

On page B7: The growing Chinese middle class as pointed out by Kagan, a senior associate at Carnegie Endowment for International Peace. But the middle class in USA is shrinking as most economists have observed via research studies lately.

Francis Shieh a.k.a. Xie Shihao,a lifelong student to study US-China comparative economics via human behavior(lifestyle) as the basis for economic development. March 24, 2008 at 10 a.m.