Household debt as a fraction of disposable income is up uniformly from 10 years ago. But, I think this just reflects rational behavior - since interest rates are so low I bet debt payments as a fraction of income are actually flat or down. (Certainly the case with mortgage debt, although perhaps not with credit cards.) If you trace all the way back, the responsibility for this consumption bubble goes to Greenspan and complicit Asian central bankers (who have elbowed the bond vigilantes of the 90's off the stage).
I was amazed this week that treasuries and the dollar rallied on the basis of Greenspan's G7 comments and Bush's non-credible budget. This may be an opportune window to exchange some dollars for hard currency, before the FX traders decide there is no chance that the US current account or budget deficits will improve in the near term.
