The US may have to increase interest rates because the rest of the world is getting concerned about the debt level and will be looking for yield. Only a higher rate will draw the 'thundering herd' back to feeding capital back into the States.
Of course the spending binge hasn't only been funded by the housing boom.
Indebtedness began to drop into overdrive approximately twenty years ago which coincides with the beginning of the twenty year bull run in equities. Housing picked up the slack when equities hit the wall in 2000.
What is likely now imo is that Europe may well pick up the mantle of world economic powerhouse. It does after all have a larger total economy....
That could leave the US to flounder and unwind in the same way that Japan did beginning a decde ago. And still Japan goes down. But who would have believed that would ever happen in the late eighties?
