Gold is through $700 an ounce for the first time in a quarter of a century. Platinum prices have gone through the roof. Copper is now so expensive that the metal in a two-pence coin, as my Guardian colleague Richard Adams noted last week, is now worth 3p. Oil is trading between $70 and $75 a barrel; stock markets in New York and London are at their highest levels in six years. The MSCI - an index of 49 stock markets in 49 developed and developing countries - hit an all-time peak.
In truth, the US trade deficit is merely a reflection of the real problem: debt-sodden American households. There are several ways this can be illustrated. One is to look at the personal savings rate, which in 2005 was negative for an entire year for the first time since the Great Depression. Another is to look at the balance sheet of the household sector. The latest figures suggest it is in deficit to the tune of more than 6% of GDP. This precarious state of affairs has been disguised by the strength of the US corporate sector, which has been running a healthy surplus and expanding strongly. But the optimism in boardrooms would be quickly dented if consumers stopped spending. The risk is that robust expansion in the first half of 2006 will prove to be a mirage: the next 18 months will see bust follow boom. If the US consumes at a slower rate, China will produce at a slower rate.
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