The consumption economy: take on more debt!

The Greek vote does raise a wider issue at the heart of the weak global economy, too much debt!  Central banks have merely provided a stay of execution with record low rates over the last six years, the issue of over indebtedness at many levels – country, company and individual – has not been resolved. At the same time, our capitalist consumption based economic model relies on people spending more, so it encourages and requires people to take on more debt. This is unstainable because it merely brings forward consumption from the future, what former Bank of England Chairman, Mervyn King, likened to “running up an ever-steeper hill”. As a simple example, just last week Honda’s US sales chief warned about the “stupid” loans their competitors are offering to drive sales. “We’ve seen this movie before, we know how it ends, and it’s not pretty”.