The Price We Pay

[kentuck]

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Nobody wants to be called a naysayer.

But the truth may be that this "Great Recession" is much worse than any of these experts have noted?

The stimulus was only a temporary relief from the decline in this economy. We have had too many years of supply-side economics to get out so easily. We are swimming in deep, deep water.

We should operate from the premise that the present economic downturn is caused by the lack of demand? We can argue about what caused the lack of demand but it is rather obvious that people do not have access to money the same way they did only two years ago.

Before the housing bubble, everybody was spending on credit cards. Except those, of course, who had maxed out on their cards, and had refinanced their homes to pay off their credit card bills and to have a little extra spending money. That had been the normal cycle for many average consumers for many years. But then, the housing bubble burst and that was the end of easy money - no more credit cards and no more re-financing the home. That is where we are today.

Unless we can put money into the pockets of average consumers, we will continue in this downward slide. We live in a consumer society. People have to consume or the economy stalls and declines. It is not true that people are not spending because they are "uncertain" about the future. They are not spending because they do not have access to money (or credit cards) the way they did in the past. This is the price we pay for easy credit.


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[Nay]

1. Thank you. I've tried to explain to people that NO ONE HAS ANY

MONEY. I exaggerate, of course, but you know what I mean....unemployment is high, people can no longer use their houses as ATMs (they never should have been able to do this), hours worked per week is low, there are no raises, and ppl have maxed out their credit cards. My family has money because we are frugal and not the type to buy every trinket we see. I realize we are different from most Americans, but the fact that the former economy depended 70% on the wild spending of the majority of Americans meant that the economy would never survive in that form.

[midnight]

2. This is why getting the TARP money

into the hand of mainstreet was so vital. Instead it is being discovered that it was funneled to foreign banks.

[kentuck]

4. Who's calling the shots??

President Obama or the "invisible hand" of the marketplace??

[Greyhound]

3. What we (rightly?) refuse to acknowledge is the failure/collapse of the model.

This leads to these destructive decisions to simply re-start the blown engine. The truth is much worse than anybody wants to admit and there seems to be a tacit agreement that we prefer to slowly sink rather than go through the pain of re-creating a new system.

[kentuck]

5. The model has collapsed?

Indeed, that may be the case.

[Greyhound]

6. Yes. to continue the metaphor, it was revved way past the redline

(One example, AIG has/had policies totaling 11 times the Global GDP when it collapsed), and the engine threw big chunks of metal through the block and the cylinder heads, and what has been done is to plug the holes with money and cranked the starter.

Because of this insane system that allows private, commission-based entities to control all the money in the world, there is more money that value. IOW, their cut is more than our capacity to generate.