Bor­rowed party

The Washington Times Weekly - - Culture, Etc. -

“Con­sumerism is as Amer­i­can as cherry pie. Plasma TVs, IPods, gran­ite coun­ter­tops: you name it, we’ll buy it. To fi­nance the na­tional pas­time, Amer­i­cans have been bor­row­ing from abroad on an in­creas­ingly stun­ning scale. In 2006, the in­fu­sion of for­eign cash re­quired to close the gap be­tween Amer­i­can in­comes and con­sump­tion reached nearly 7 per­cent of gross do­mes­tic prod­uct (GDP). [. . .] In other words, the quan­tity of goods and ser­vices that Amer­i­cans con­sumed last year in ex­cess of what we pro­duced was close to the en­tire an­nual out­put of Brazil. [. . . ]

“ ‘Part of the rea­son peo­ple are spend­ing be­yond their means,’ says Rawi Ab­de­lal, an as­so­ci­ate pro­fes­sor of busi­ness ad­min­is­tra­tion at [Har­vard Busi­ness School], ‘is be­cause they are — in a way — wit­ness­ing the end of the Amer­i­can dream.’ Be­tween 2000 and 2005 [. . . ] work­ers’ av­er­age hourly wages were stag­nant. [. . .]

“Some peo­ple have re­fi­nanced their mort­gages three or four times to buy cars, swim­ming pools and other lux­u­ries. ‘It seems like we are bor­row­ing to have a party,’ says Ab­de­lal.”

— Jonathan Shaw, writ­ing on “Debtor Na­tion,” in the July-Au­gust is­sue of Har­vard Mag­a­zine

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