Yesterday, I left you with the thought that the London traders had been buying dollars since they arrived back from their three-day Holiday weekend. The U.S. traders did the same… And I believe profit taking was the order of the day.

For those holding out hope that the American economy can miraculously avoid a long and deep recession, consumer credit is often viewed as the wonder drug that can cure all manner of economic ills.

“Total debt everywhere, like Old Man River, just keeps rolling along, like a snowball rolling downhill, getting bigger and bigger, which is such a strange mix of metaphors that I realize that I am completely confused and frightened.”

The tax rebate of 2008, which is scheduled to begin this week when the first checks go into the mail, is the latest example of American mercantilism in action.

Looking at the credit data, it seems people have begun to stop paying their bills in order, from most expensive to least. Houses came first – that’s the most expensive bill. Autos came second.

Can we talk about the Australian economy for just a moment today? First, some nitpicking. Today’s Australian has a headline that reads, “Credit card debt slows to 13-year low.” That would lead you to believe that something good has happened in the economy. But has it?

Late credit card payments and outright defaults have soared in recent weeks. The most recent data says that “dead” balances written-off as uncollectible by banks have jumped 24% from a year ago. Late payments are up 16%. Can this be linked to the subprime mortgage meltdown? Our research says it is.