How is the economy, from a business perspective?

Till Debt Do Us Part
by Bernard Condon | Feb 16 '04

America's steamy affair with credit has kept the economy growing. Time for a cold shower?
Now that the great refinancing boom is over, it seems odd for a mortgage bank like New Century Financial to be lending more than ever. But this Irvine, Calif. institution doesn't lend to just anyone. Its customers are so buried in bills they have no choice but to tap the value of their homes to pay them off--whether or not rates are rising.

"If your home keeps appreciating, why not use the equity?" says New Century Chief Executive Robert Cole.

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What has happened during the past several years is that more people have bought homes - new and used. From that perspective, it was good for the economy, because that meant more factories were turning out goods, and kept them employed. Low interest helped - even in auto sales. The problem? Most people are up to their eyeballs in debt, and more bankruptcies are being filed. The federal government and private debt will eventually bite us in the butt with inflation, because there's too much money in circulation without anything to support it. When that happens, the world economy is gonna be in big trouble.