Posted in Concepts, Marketing
9/05 2011

The New Financial Reality

What if the situation we see today is the new financial reality? What if Americans will no longer use credit card debt to fuel the global economy?

Overspending on credit lines was probably supported by ever increasing house prices. But what if house prices stop going up and start going down as is happening today? You no longer take risks with debt and stop spending money you don’t have.

The US housing market has burnt a lot of people, salaries are growing, so house prices aren’t going to grow. Therefore, don’t expect the US consumer to start spending any time soon. Once bitten, twice shy.

This is the new reality.

  • benri

    Canadians follow the same path, they are more indebted than US citizen right now. Canada is just lagging in the blind positivist that happen before a bubble burst.

  • Richard Beck

    It’s certainly concerning. I personsally find it hard to understand how people can afford to spend like they do. Canada has a different environment than the US, but fundamentally, you can’t spend more than you have.

  • benri

    One of the difference between US and Canada is the over-speculation, over-building in US housing market. Canadian can still have a co-lateral with their house. If prices begin to falter in Canada things can change a bit. But this is not a bubble of the same scale than in US.

  • Richard Beck

    The Canadian debt bubble may be more linked to unsecured debt, such as credit cards etc.