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US sitting on credit 'volcano'
(Damian Reece, Davos, The Sydney Moring Herald, January 26, 2007)
LEADING US commentators have warned that America is facing grave threats from a "crash" resulting from the country's huge entitlements bill while the rising level of consumer debt supporting the economy is a volcano "waiting to explode". . . . Jay Nordlinger, a former speech writer for President George Bush, who is now managing editor of the National Review, said the benefits bill must be tackled. "There is a great crash coming," he said, reflecting rising concern over the rising health-care entitlements that have crippled employers such as General Motors and Ford. . . . In a wide-ranging debate at the Davos conference, delegates discussed the most pressing issues facing President Bush, including Iran and Iraq as well as how the US deals with China. . . . Commenting on the economic and business outlook for the US, Arianna Huffington, a blogger shaping debate in the US in the run-up to the presidential election, said: "The amount of personal debt is a volcano waiting to explode. The number of bankruptcies is staggering." . . . She highlighted the trend of many people relying on credit to fund basic day-to-day purchases. "If there is going to be a housing downturn it's just going to be pretty disastrous for many families right now. The savings rate is close to zero. The best business to be in right now is renting out storage space. People store purchases that they don't have room for in their homes." . . . Ms Huffington expressed anxiety in America that the consumer had been driving economic growth in recent years but at the expense of economic security in the future. . . . Harvard University's David Gergen said: "One serious flaw in economic policy is paying enough attention to the people who are getting hurt. It is going to create a lot of social tension in our country over time."

posted by LoZo 5:00 PM