Say good bye to AAA rating

[famousringo]

Words Of Wisdom said:

Avinash_Tyagi said:

Words Of Wisdom said:
Everyone loves spending money when it's the government's and not their own...

People also spend their own like crazy, the average consumer has very little savingings in the US and a lot of debt

That seems really strange from my POV. Source?

A Google search would turn up tons of sources. Here's an interesting one:

http://www.msnbc.msn.com/id/11098797/

"The Commerce Department reported Monday that the savings rate fell into negative territory at minus 0.5 percent, meaning that Americans not only spent all of their after-tax income last year but had to dip into previous savings or increase borrowing.

...

 With employment growth strong now, analysts said that different factors are at play. Americans feel they can spend more, given that the value of their homes, the biggest asset for most families, has been rising sharply in recent years."

This article is from 2006, reporting on 2005 numbers, so it all predates the current mortgage crisis. 

Here's an even more interesting link with nifty charts and some in-depth analysis:

https://www.phn.com/Default.aspx?tabid=674

There's too much that I'd like to quote, so I'll paraphrase. First, the article talks about how this trend is somewhat deceptive due to increasingly uneven wealth distribution and the spending habits of the very rich. Then it goes on to say this only becomes a big risk if the economy goes into recession or the housing market crashes.

It looks like the waters may only get rougher for the next little while.