It’s hard to exaggerate how much economic trouble we’re in. The crisis began with housing, but the implosion of the Bush-era housing bubble has set economic dominoes falling not just in the United States, but around the world.
Consumers, their wealth decimated and their optimism shattered by collapsing home prices and a sliding stock market, have cut back their spending and sharply increased their saving — a good thing in the long run, but a huge blow to the economy right now. Developers of commercial real estate, watching rents fall and financing costs soar, are slashing their investment plans. Businesses are canceling plans to expand capacity, since they aren’t selling enough to use the capacity they have. And exports, which were one of the U.S. economy’s few areas of strength over the past couple of years, are now plunging as the financial crisis hits our trading partners." Paul Krugman
"Do not stare too long into the abyss lest the abyss take notice of you…" I "improved" that a little, but…
The abyss seems to have noticed us. I watch too much 24/7 news, particularly the business channels. I have it running in the background while I work. After a while a cumulative impression grows that Krugman is right and that we do stand on the edge of the abyss looking down into eternity. Rothko painted the feeling in that scene. Actually, he painted it over and over again until it killed him.
A total collapse is a possibility, a collapse of everything; the economy, the social order, government authority. How high does unemployment have to rise in a country full of people raised to believe in their "right" to instant gratification before the restraints that protect the "rights" of wallstreeters to their undeserved bonuses seem trivial things?
The Republicans do not want to spend money uselessly? They may wish soon that the money they saved would buy something, anything. I lived in occupied Germany as a child. Our father was one of the occupiers. I remember the Germans when they had wheelbarrows full of Reichsmarks. Only the intervention of the victors revived their fortunes. Who will revive ours?
I am not sure that President Obama's stimulus package will do what is hoped. The idea seems a kind of half-assed Keynesian notion that dumping a lot of money into the economy will jump start the patient. The image of Barack Obama with the paddles in his hands is distracting. I surely do hope that will work. If it does not, then we should all look to our situations. pl