World Hero: The American Consumer
It is beyond trite to note that U.S. markets have absorbed Bill Clinton's impeachment without fear or agitation but would buckle if the guillotine blade were hurtling toward the neck of Treasury Secretary Robert Rubin or Fed Chairman Alan Greenspan.</br></br>That analysis is also misleading: It takes credit away from the truly heroic figure of the current history-defying U.S. economic expansion in a world of strong deflationary pressures. The hero to whom economists will build statues to commemorate this epoch is the American consumer.</br></br>Yankee Consumer shoulders the burden of a world suddenly adrift economically by continuing to borrow, spend and consume with impressive single-mindedness. If that spending suddenly stops, the international financial game of musical chairs played in the Clinton years will come to a devastating halt.</br></br>But there's also evidence that American consumers have instinctively understood that the world economy now operates on a new and still poorly glimpsed paradigm that pays little attention to classic rules of inflation, productivity or the relationship between currency values and interest rates.</br></br>American buying habits are fueling unprecedented rises in U.S. private debt -- now estimated at 4 percent of gross domestic product -- and stock market valuations, which are feeding each other to produce a potential "bubble economy." This should be the stuff of nightmares for Greenspan and Rubin.