The economic bubble is only slightly deflated you have seen nothing yet.

This articles sure has a whole lot of economic information and it is easily understood with the aid of his graphs. It does not paint a pretty economic picture for the U.S. for the next few years. Being a realist I agree with what it implies. I think we have yet to feel the real economic pain. If you want to look at the reality of it all take a good look at the data in the article.

The economy probably will be even worse than anyone imagines because we can already see that government is going to screw up the economy even more through failed socialistic interventions. Government also helped make the bubble in the first place by government intervention of easy credit and overspending or it would have corrected itself long ago. The bubble will completely deflate and go at least 10 or 20 percent negative to what it was at the start of the bubble before any balance is restored, if that is even possible in this generation.

The only thing that might allow you to think the economy is not going in the tank fast is inflation but you will soon figure out that you are in an economic decline when your income is not keeping up with rapidly rising prices. Of course the economic downturn could turn into a world price war and a full fledged world depression and then we will not see stagflation but instead we will see a great depression like in the 1930’s with low prices but few jobs and little income to buy anything.

I guess it is possible that we could have some economic miracle but with socialists in control of congress I personally do not see how that is possible.

Guest Commentary

The Great Consumer Crash of 2009

* by James Quinn
* August 19, 2008

James Quinn is senior director of strategic planning, the Wharton School, University of Pennsylvania.

“It is easy to ignore the storm if you look at the opposite horizon. When the storm reaches your location there can be no more ignorance.”

I hate to tell you, but the storm has reached your location and it is a Category 5 hurricane. The levees are leaking. Ignore it at your own peril. The 6,000 sq ft McMansion buying, BMW leasing, $5 Starbucks latte drinking, granite countertop upgrading, home equity borrowing days are coming to an end. The American consumer will not go without a fight. For the last seven years the American consumer has carried the weight of the world on its shoulders. This has been a heavy burden, but when you take steroids it doesn’t seem so heavy. The steroid of choice for the American consumer has been debt. We have utilized home equity loans, cash out refinancing, credit card debt, and auto loans to live above our means. It has been a fun ride, but the ride is over. We can’t get steroids from our dealer (banks) anymore.

There has been and will be resistance to the inevitable deep recession that is coming. The American consumer is not cutting back willingly. They are being dragged kicking and screaming towards the joys of frugality. The “material generation” needs to dematerialize. My biggest concern is that our politician leaders and their cronies running our government will continue to try and reverse the normal capitalistic course of recession and expansion. Companies need to fail, housing needs to find its bottom based on supply, demand and price. Those who gambled must be allowed to lose and suffer the consequences. If the government attempts to shift the losses to those who lived lifestyles of thrift, an angry uprising will ensue. Government intervention in this natural process could lead to a decade long depression. Let’s hope that reasonable heads prevail.

Full article