A couple of months back, sociologist David Harvey spoke to an audience at the Royal Society for the encouragement of Arts, Manufactures and Commerce (RSA) in London. His talk was all about explaining the recent crisis as a crisis of capitalism and something that warrants deeper exploration, at least from his Marxist perspective.
You might not like his thinking or his politics, but this animation is fantastic and a brilliant way to get across complex information.
It looks like Americans are becoming allergic to debt, the numbers had been accelerating upwards every single year, The Fed started records in 1979, now it looks like they are tumbling downwards. What defines a country when new homes, new cars and the debt financing of those material possessions are all in decline?
If you look at the data on credit, it's clear there's a massive shift underway. Consumers have become fanatical about cutting back on debt. October credit fell by $3.5 billion (-1.7% year over year). September's decline was dramatic, $8.7 billion. October marked the ninth month of declines, a trend that has not been seen in 66 years. This is unlikely to change until consumers feel more confident about the economy and their own personal situation. It remains unclear if the recession is well and truly over, although indicators suggest unemployment has peaked, it's likely consumers remain unconvinced.
Here's a great visual from The Deal that explains the packaging and re-marketing of credit. Sort of explains how the badness was turned into goodness and everyone slept soundly at night until the day they realized the badness was real bad. It's also the system that propped up the consumer economy. An economy driven by cheap and easy credit isn't sustainable. For years, the US economy has been running on cheap credit. What happens when it goes away remains to be seen, but companies are need to get amazingly creative if they want to continue to sell in these tough times.
