The American Way

So, do you think that the United States, our primary economic partner, is going to end up getting out of the doldrums? If we trust Wall Street’s applause in response to American consumers going shopping in hordes on Black Friday, then things are looking better for them.

During this shopping binge, Americans broke a record: $11 billion were spent on all sorts of goods that are surely essential. $186 million were spent through online shopping sites (another record).

The tendency is to hope, and it is contagious. TV journalists, wanting to explain this Black Friday craze, suggested that it is the result of Americans’ desire to get out of the recession, nothing less.

The magnitude of this event sparked the following question from my spouse: Did people pay for their purchases with cash or credit? Good question, because isn’t the debt of American households and their government one of the reasons, or the main reason, why this superpower is down and out?

The numbers are staggering: on Nov. 17, American debt rose to $15 trillion. $15 trillion! That represents 99 percent of the gross domestic product of their economy — in other words, the total annual value of goods and services in the United States. Gigantic.

And the debt is rapidly spiraling out of control: Every seven and a half months, it rises by $1 trillion. Next year, according to the experts’ calculations, it will be 105 percent of the GDP. Then it will be 115 percent in 2016. Interest explains these increases, but they are also caused by the federal government’s annual deficit, which is annually around 10 percent of the size of the economy (around $10 trillion). The wars in Afghanistan and Iraq, which also cost a fortune, also have a large effect on the deficit, but that’s another debate.

Despite these abysmal numbers, politicians are incapable of making decisions to put their public finances in order. While Democrats and Republicans live in denial, the country is bogged down.

American households are on the same path of financial decline. Their collective debt in July was $17 trillion. When you take a look at other statistics on employment, you might think there’s a risk that things will get even worse for them. The Department of Labor’s most recent findings indicate 3.74 million people unemployed for the past few weeks. This gives an unemployment rate of 9 percent. And that’s not counting the discouraged people who have stopped looking for a job.

Let us return now to our original question: How did American consumers pay for their purchases on Black Friday? And how will they pay for their other holiday purchases? For the vast majority of them, we can conclude that they will go even further into debt. All of this is happening while the effects of the housing crisis, which forced tens of thousands of families to give their houses over to the banks, and which seriously sunk the world economy, are still being felt.

How can analysts rejoice at this consumption craze in these times of financial crisis? Our economic system is based on the creation of wealth: Businesses make goods and sell them; people buy and consume them. And the wheel goes round to create growth. The problem lies in excess consumption, when people live beyond their means. In this case, governments, like citizens, fall into a dangerous spiral of debt. These debts and the interest that they accumulate gradually reduce their breathing room.

How, then, can the Americans get out of this situation? One would immediately think: by reducing their expenses. But we could conclude in light of the records established by Black Friday that that’s anti-American, so they do the opposite. It’s the American way!

These Americans are crazy, and that’s what makes the irresponsible people who hold sway over Wall Street so happy.