Tuesday, February 03, 2009

"I have no basis for this opinion, but it's the other side that practices faith-based economics" 

Consumers are pulling back because they�ve realized that they�re too far in debt. The economy is shrinking in large part because consumers are pulling back. And the result, almost surely, is to leave household balance sheets worse than ever. I can�t do this accurately until the Federal Reserve�s flow of funds data have been updated, but almost without question the ratio of household debt to personal income has been rising, not falling, as consumers try to save more.
I guess winning a Nobel means never having to wait for data. Or maybe it's the water. (Emphasis mine)