A consumer digital camcorder is a want, not a need. The incremental benefit of the very expensive camcorder vs. the $244 model is a luxury by any definition. Who would agree to finance such a purchase in January, 2009? A child.

This morning while getting ready for work I heard an interview on NPR with a very nice-sounding woman who has just lost her job. Poignantly, she closed the door so that her young child would not hear her when she told the interviewer that she will probably lose her house. I feel terrible for this person, and worse for her child. But did it never occur to her when she was deciding what size mortgage she could handle, or whether to buy vs. rent, that she might be in this situation?

American consumers are awash in debt, drowning in it. This is the fundamental issue with the stimulus proposal. We're trying to borrow our way out of debt. Unfortunately, we need a recession. That is, consumption must decline because for some time we have been consuming more than we produce or have reasonable prospects of producing. Monetary policy has been used to inflate a series of bubbles to avoid the consequences of excess debt, and the more we try to hold it off, the worse it's going to be. Bourbon works as a hangover cure, but only for a while.

It's theoretically possible for an intelligently-designed stimulus action to help smooth this landing a bit, but we can't avoid a painful adjustment. Americans are going to live in smaller houses, drive older cars, vacation nearer to home and have less impressive digital camcorders than they expect.

Surely, though, this is already happening, and the American consumer is starting to de-leverage? Yes, to a degree. I asked the salesperson at Best Buy if anybody really was taking this kind of financing offer this year. His reply: "Not much. Mostly they take the plan with zero interest for the first 18 months".