Debt

The economy is going to be moribund, at best, for a good long time. The U.S. consumer is tapped out, 'busted', and deep in debt. The total amount of debt can be debated, but in my opinion, a good amount of the world's economic growth since 2001 emanates from the burgeoning debt load of the United States.

Looking at world trade figures for 2008, the U.S. current account deficit was around $ 700 billion dollars. In second place was Spain, at about $ 166 billion. The top three surplus countries of China (378), Germany (266) and Japan (176) just overtop the U.S.'s deficit. More than the numbers, this fits with the facts on the ground.

It doesn't take unique insight to see that these three export dependent countries, and their smaller satellites, will face a dramatic unwinding as the U.S. consumer goes into deep freeze. It also belies claims that the middle-class in the BRIC countries, Japan, or the E.U., was or is capable of soaking up the extra demand needed for world economic growth. This is because of the dollar's reserve status, and government policies in surplus countries that have been entrenched a very long time.