George Will: Clunker School of Economics

PATRIOT POST, 9/12/2010 by George Will - WASHINGTON: Looking back with pride, the British are commemorating the 70th anniversary of the Battle of Britain, when Churchill said of the pilots fighting the Luftwaffe: Never "was so much owed by so many to so few." Looking ahead with trepidation, Americas are thinking: Never have so many of us owed so much. ∴ Actually, they owed slightly more when the recession began, when household consumer debt was $2.6 trillion. The painful but necessary process of deleveraging is proceeding slowly: Such debt has been reduced only to $2.4 trillion. Add to that the facts that the recession has reduced household wealth by $10 trillion, and that only 25 percent of Americans expect their incomes to improve next year. So they are not spending, and companies, having given the economy a temporary boost last year by rebuilding inventories, are worried. Hence, rather than hiring, companies are sitting on cash reserves much larger than the size of last year's $862 billion stimulus. Read more at Patriot Post...