Uncle Sam Decends Even Further Into the Black Hole of Debt

A staggering report by Bloomberg offers more evidence of increasing instability, volatility, and tenuousness of Uncle Sam's Paper Tiger economy. Not only does the government finance its endless wars and corporate whores on the credit of others. But the population, too, spends more than it produces, exhibiting the same dangerous behavior:

Borrowing by consumers rose the most in 10 months in April as Americans took out more car loans and charged more on their credit cards.

Consumer credit, or nonmortgage loans to individuals, rose $10.6 billion in April, or at an annual rate of 5.9 percent, to $2.17 trillion, the Federal Reserve said yesterday.

The increase, which was much higher than expected, may be showing that people who relied on equity from their homes rather than bank debt during the five-year housing boom are returning to more conventional credit as the real estate market cools. Higher interest rates will slow the pace of borrowing and consumer spending in coming months, economists said.

Nonrevolving debt, including car loans, rose $7.6 billion in April after rising $2.9 billion in March, according to the Fed's report. Revolving debt, including credit cards, rose $3 billion after falling $1.5 billion a month earlier.

When the economy finally does collapse beneath the weight of its own accumulated debt, rest assured the pain that results will undoubtedly fall on the working class.