[Leanan]

US current account deficit puts a cloud over economy:

http://news.ft.com/cms/s/f21a427c-093b- ... 511c8.html

$this->bbcode_second_pass_quote('', 'T')he US has racked up a deficit of around $2,247bn (€1,821bn, £1,260bn) since 2001 without suffering the ill effects predicted by textbooks: chronic currency weakness and surging interest rates.

In fact, the dollar has staged a modest revival over the past six months. More mysteriously, America's debt to the rest of the world has actually declined as a share of national income since 2001.

"It is as if America has been splurging on a credit card without the purchases showing up on the monthly bill," says Bob Sester, an analyst at Roubini Global Economics, a research company. But many economists believe the US has been living in a fools' paradise. Its debt to the rest of the world looks set to rise steeply over coming years. By the end of the year - and for the first time since records began in the 1960s - the US is likely to be paying more to service its debts than it gets in foreign income.

As this happens America will find itself borrowing not just to fund current spending but simply to service previous debts - a position more commonly associated with a developing economy.

[fossil_fuel]

looks like we're screwed. people need to stop borrowing and pay for their purchases with money they already have - what happened to buying only what you can afford?

[I_Like_Plants]

The only thing that's going to stop it is the "puke point" or, the point at which the glutton, however much he wants more food, can't fit any more in and pukes all over the room. The counterpart to that in the credit world is when the borrower is eager to borrow more, but can't pay the interest on what they have, they're 90 days late or 180 days late, their house isn't increasing in value any more, and they're incapable of taking on more debt.