Good stuff, Randall, though I'm heading more towards "the sky is falling" the more I read on the housing loan situation, which is now spilling into auto loan. I sure hope I'm wrong.
There is some theorizing that what we're seeing is the end of what has been considered the American Way of Life (really just for the past 50 years, but people get quickly adjusted to being comfortable)- interesting blog post:
http://jameshowardkunstler.typepad.c...er****_nation/
I also found comments on John Cole's Balloon-Juice's thread, "We Are All Sub-prime, Now" interesting reading:
http://www.balloon-juice.com/?p=9510#comments
I don't know what I think about it- I'm not good at snap judgments so I have to mull most things, but I do think this is bigger than a year-long recession.
And I don't think the gov't will leave things alone and let the industries that should fail, fail. They didn't during the junk-bond scandal of the 1980's- instead, they bailed out the industry and passed the bill along to you and me. Or rather, my parent, as I wasn't working yet, though I'm sure I'm probably still paying for it, as our DT'ers kids will be paying for Iraq. Borrow and spend, that's our Administration's way. And Americans adopted it as their own way, too.
It's funny when I get accused of favoring "redistribution of income" because what we have now is just as much about redistribution of income; it's just that it's distributing it upwards, through corporate welfare, inflated executive salary, underpaid rank-and-file workers and an increasingly regressive tax rate. Who was it who said it was wrong that his secretary paid a higher tax rate than he did? Buffet? Gates? One of them. The US gov't has a great hand in redistributing income- it sends it to the top, where most of it stays. Hey, if you're satisfied with how things are going, great; you know how to vote in 2008. Me, I don't think that's right; I prefer a society with a middle class. And I don't think a higher top tax rate will lead to violence and rioting in the streets- Europe has a lot of riots, but I don't recall any being linked to the tax rate. The wealthy don't resort to violence; they don't have to. They resort to white-collar crime and bribing gov't officials.
We've been redistributing income upwards for 50 years now, while at the same time telling middle- and lower-class Americans they can still have it all and not pay for it and now the cracks are really starting to show. It took us quite a while to get here, and it'll take quite a while to get back out. If we can- now we also deal with a world that is catching up to us, and is going to want their fair share of the resource pie. And that's not going to shift back in our favor- the US share of the world GNP is declining and it's going to continue. And as their purchasing power increases, we may see ourselves competing for the same cheap crap we depend on them selling us now. And we don't have the manufacturing jobs to make it ourselves.
As for solutions? I don't know. Re-regulate the credit industry for one- put a limit on interest rates so Americans in debt have a chance to dig themselves back out. Regulate loaning. And yes, for once, let the companies that should go under, go under.
But how do you tell Americans to save when the nation's economy depends on them going shopping?
There are a lot of foreclosed houses in the neighborhood I'm in right now (I'm living out of town for a few weeks)- it's really depressing.
I wonder if maybe the Baby Boomers are really God's chosen people- born after the Great Depression and most of them will die before the bill fully comes due for the easy life most of them lived, economically speaking.
(No offense to the Boomers- very grateful for Civil Rights and Women's Lib and all that. The Beatles were pretty good, too.
)
Thanks for posting, Randall. Good to hear from you again.