The Democrats applied exactly the wrong medicine to this recession, poisoning the economy instead.
The only good news:
The next few years are going to be grim, and those in charge do not inspire confidence. Would you entrust your welfare to Jerry Brown, Andrew Cuomo, Pat Quinn, and Barack Obama? We have to hope, however, that these men wake up, swallow their preconceptions, and without delay move decisively in the direction of balancing the budgets of California, New York, Illinois, and the United States.
I myself very much doubt that they will do so. Unless these men – our President above all – demonstrate qualities that they have never before evidenced, we are in for a truly terrible ride. There is only one silver lining; and welcome though it might be in ordinary circumstances, it is hardly worth the cost. Politically, this means that Barack Obama is likely to be remembered for having done to the Democratic Party what Herbert Hoover did to the Republicans.
As he says, a good outcome, but not worth the cost.
No analogy is perfect, but if the author is correct, we’re likely to witness the financial equivalent of a plane crash. Aviation accident investigators frequently state that most crashes aren’t caused by any single thing. Instead, a chain of events precedes most crashes, often reaching the point where the pilot is overwhelmed by conditions or the plane’s limits are exceeded.
Here, we’re witnessing a chain of events going back more than 10 years. The easy money policies of the Fed and corrupted leaning practices led a lot of people to go far more deeply in debt than they could afford. The increased housing demand drove up prices to the point where high percentages of people could only get a home using an adjustable rate interest only loan. On top of that, a lot of people thought of their homes as ATMs and took out additional debt based on the appreciated values of their homes. When the bubble burst, prices started dropping and people found themselves unable to refinance their homes because they owed more than they were worth. They were unable to afford the higher payments and/or lost their jobs, so those homes entered foreclosure. On top of that, quite a few people entered “strategic default” – knowing they were going to lose their home anyway, they quit trying and quit paying. Millions of foreclosed homes will eventually hit the market, further depressing prices and leading more people to default. As if that weren’t enough, governments at all levels are over their heads in debt and have outstanding pension and entitlement liabilities they can never afford.
I don’t know how it will end, but it seems certain that it won’t end well. Things are likely to get very ugly for the next 10 years or more.
I think the tendency is similar all over the world (perhaps China is an exception). It is natural because it’s well-known that economic systems are interconnected which is the result of globalisation. So, there’s no wonder that America is going to suffer like other countries. And the successful outcome doesn’t depend on Obama only. There’re eternal circumstances as well.
It’s unambiguously the first phase of Strauss & Howe’s “Crisis of 2020” – which means that it’s mostly timing, but the manifestation of the timing is a period of incompetent leadership. In this instance, however, we can also see (in the form of, for example, historical trends in household debt) a pattern of steadily increasing personal irresponsibility on the part of most of the population beginning in the mid-1980s. A suitable helping of critical examination should be directed into the nearest mirror.
G’day,
Does anyone seriously believe NASA will survive the coming economic collapse with any where near its current budget or form?
ta
Ralph
“incompetent leadership”
I’ve been watching for this. They aren’t leaders (or shouldn’t be.) They play leaders. Too many idiots following them and not enough holding them accountable. Centralized power will ALWAYS result in disaster.
I don’t know how it will end
Yes you do and ugly doesn’t begin to describe it. Actual survival, not financial, but actual is at stake for many. Does anybody know where the germans got those wheelbarrels of money to buy a loaf of bread?
I don’t want nor need leaders. I want people to honestly represent us in government. I had leaders in the Army and to a much lessor extent the Air Force. No one in DC is a leader in my opinion, nor should they even try.
Does anybody know where the germans got those wheelbarrels of money to buy a loaf of bread?
I don’t remember where I saw this, but someone pointed out that we have an advantage over the Weimar Germans. We have debit cards, so we won’t need wheelbarrows. Just put $100 trillion on your debit card before going to the supermarket. Simple.
Time to start buying Brazilian cruzeiros.
The question wasn’t about wheelbarrows, it was about trillions.