We mentioned yesterday that correspondence from us until Monday is going to be spotty, so today’s missive will be a little shorter than usual, and we can hear those sighs of relief, dear reader.

Back in the USA, the foundation seems to be giving way.

Yesterday, we noticed that credit card debt is soaring. With no more ‘equity’ to pull out of their houses, they are looking for credit wherever they can find it.

Now this, from Dow Jones:

“Cash-strapped Americans raiding their 401(k)s”, reads the headline.

“Despite potential tax and investment problems, more investors have been borrowing from their 401(k) plans or taking hardship withdrawals in recent months...

“Many in the field expect more borrowing in 2008, as consumers struggle with tighter credit and potentially higher mortgage payments...

“‘I think a lot of individuals are looking for different options,’” said an expert quoted by the news service. “‘This is really a last resort.’”

The article continues: “T. Rowe Price has calculated that someone with a balance of $150,000 who borrows $10,000 at age 40 would see an $83,137 difference at 65 even if the loan is repaid, given an 8 percent return on investments and a 7 percent interest rate on the loan...

“‘What I’m finding is Americans in general are spending more than they make,’” said a consumer financial advisor. “‘And as the mortgage industry implodes, they look for where else they can borrow.’”

“Deficits don’t matter,” Dick Cheney allegedly remarked. What was he thinking? Maybe “deficits don’t matter to us politicians.” But they sure matter to people who are trying to balance a family budget. Because of past household deficits, combined with the ingenuity of the lending industry, and the insouciance of the Fed, many families aren’t able to make their mortgage payments.

Coast to coast, the story is the same. It is the story of an economy late in the credit cycle; it is the story of a downswing, not an up-swing.

Remember, the U.S. stock market is one of the worst performers in the world. This, too, suggests to us that the United States is not in a major cyclical up-swing. When the wind really whips things up, it flies, along with the rest of the turkeys, but never gets very far off the ground.

So, if you want to speculate on stocks, you’re probably better off in markets with more upside potential.

Colleague Graham Summers reports that one of the smartest people on Wall Street, Marty Whitman, has moved more than half of his equity investments overseas. The breakdown is as follows: 53% in Hong Kong; 29% in Japan; 10% in South Korea; and 8% in Western Europe.

Only one of his top five holdings is a U.S. play.

Free Market Investor’s Christopher Hancock believes in investing outside of the United States as well.

“Money will always flow where’s it’s treated best,” he tells us. “And I think you’ll be hard-pressed to find any other place in the world that treats money better than Hong Kong.

“The highest tax bracket doesn’t surpass 17%. Individuals are assessed on only annual employment income. Dividends and capital gains are not taxed. And like many progressive tax systems, Hong Kong grants allowances for certain deductions like charitable contributions.

But this is what really makes Hong Kong an interesting place to put your money.

“Hong Kong recently repealed its inheritance tax on property. Consequently, many Hong Kong property owners (unfortunately, U.S. citizens who own Hong Kong property are still taxed under inheritance laws) are now able to pass down real estate assets without any tax liability whatsoever.

“It’s no wonder 21 billionaires call Hong Kong home. And I would venture to guess that it won’t be long before many more do the same.”

Bill Bonner is the President of Agora Publishing. For more on Bill Bonner, visit The Daily Reckoning.