A friend sent me this story, which describes Bank of Canada's Governor David Dodge's warning to America: you're living beyond your means. Dodge specifically thinks the trade imbalances between us and other nations will lead to serious consequences for the US.
This story spells out the relationship between consumer debt and the international economy a bit better: we're still getting good mortgage rates (despite Fed rate increases) because China is lending us so much money.
There's no doubt, all of this could add up to a catastrophe. I don't think it will, but it's possible. People need to borrow less and save more, and our government needs to show some fiscal responsibility. Neither of those things is likely to happen, so the best thing to do is get yourself out of credit card debt and into a home at a good fixed rate. Start saving 10% of your income for emergencies. If a big recession does hit, you'll be in better shape than all the people who continue to live beyond their means.
Meanwhile, there's a bit of good news in the midst of this current DOOOOOOMMMM!!! news cycle. Friday I talked about how college students fear debt more than terrorism, and that's good, because maybe the next generation will be more fiscally responsible. Well, this story adds some support to my argument. Apparently credit card debt among college students is down. Looks like we're finally getting through to some people. Maybe we're not DOOOOOOMMMMed after all.