I found this interesting. On the wonderful Real Time Economics blog at WSJ.com, the second and third most read stories really do speak to each other. The first explains that China, India and Brazil emerged from the global recession faster because, among other reasons, their businesses and families were not swimming in debt before the tsunami. The second breaks the news that China and Brazil are discovering how to swim in debt.
What's the proper reaction to this? Fear of the next bubble? Fear of repeating the cycle of wealth to debt to debt crisis to recession to loss of wealth? Perhaps. But let's focus on the short-term good news. The United States suffers from a shortfall in demand. Stimulus efforts to increase demand have been mopped up by an overhang of debt. If we can't create new demand inside the United States, the next best thing is to look for new demand outside the United States.
That China and Brazil -- two of the large countries leading the global recovery -- are taking on debt to buy more stuff means more global demand, more dollars chasing stuff made here. To be sure, the Chinese are discovering debt on a massively undervalued currency, so they have a long way to go before becoming the world's new super-powered consumer engine. But the faster other countries' consumers recover, the faster they can buy our stuff and pull up U.S. growth.