The United States is headed for a recession that will be "much nastier, deeper and more protracted" than the 2001 recession, says Nouriel Roubini, president of Roubini Global Economics...More:
"By itself this slump is enough to trigger a U.S. recession: its effects on real residential investment, wealth and consumption, and employment will be more severe than the tech bust that triggered the 2001 recession," Roubini said.I wasn't aware that we ever really came out of the 2001 recession, but I've long recognised the housing bubble as this century's answer to tulip-mania. Of course, Republican snake oil salesmen will continue to insist that the destruction of American manufacturing and the outsourcing of our jobs will benefit the economy in the mythical "long run." And a huge audience of dunderheads will continue to believe those financial fairy tales.
Housing has accounted, directly and indirectly, for about 30% of employment growth during this expansion, including employment in retail and in manufacturing producing consumer goods, he said.
Until Ragnarok hits.
Which should be any minute now.
Question: Do we really want Dems to control Congress in 2008? If any Democrat anywhere holds any degree of power when the collapse begins, the right-wing brainwashers will try to blame that person. Or they will try to blame Bill Clinton, France, Muslims, the weather, my dog, your cat -- anyone and anything except for the party of Bush.
We have to make the public understand that the conservative philosophy which came into power with Ronald Reagan brought us this sorry legacy of failed wars and a failed economy. Our quality of life keeps declining, while much of Europe still boasts month-long vacations, 35-hour work weeks, good health care, protected domestic industries, strong unions, good schools and greater social mobility.
Go to Craigslist and look up the jobs market in Beirut. That's your future.
3 comments:
Russia just finished paying off the last of its foreign debts (which were accumulated when it was the evil empire) and now has $275 billion in foreign reserves, mostly euros and dollars.
Meanwhile, the US has an admitted debt of eight TRILLION dollars, half of it owed to foreigners, and an unadmitted debt of about fifty TRILLION. We are now accumulating debt at the rate of 3.5 billion per day.
Tell me again who won the Cold War.
While it's certainly true that the sky will eventually fall on the American economy, and that there is a housing bubble (and that its currently bursting), be cautious: disaster has an unnatural appeal to the imagination, the attraction of illicit dread is hard to resist. Visions of economic catastrophe (or just the disappearance of one's money) are too cognate with daily unhappiness, and fear of loss. You'll rob yourself of sleep, and perhaps for nothing, not even the small satisfaction of being right about disaster.
That said, the high tech bubble and the current housing downturn were both brought to us by Alan Greenspan, promoter of Republican, right-wing economic voodoo -- in this case, that government has no business trying to regulate asset prices. Greenspan refused calls to increase brokerage margin requirements in the late 1990s, thereby allowing the stock market to achieve ridiculous price/earnings ratios, largely on borrowed, leveraged money. The result was predictable.
This time around, he refused to put the breaks on the housing bubble, created by artificially low interest rates, lax lending requirements and dangerous interest-rate products (short-term adjustable rate mortgages and interest-only loans, for two) which he himself encouraged buyers to acquire. Many of these people will lose their homes now, with unknown consequences to the American banking system and Federal agencies.
The current Fed chairman Bernanke made his career by promoting the same position -- that the market best regulates asset prices. So what if the "free market" is a fantasy of the Republican faithful, which even they don't believe in? Try to cut corporate welfare, and you'll see what I mean.
Anyway, eat well, get laid, have fun. There's no predicting what will happen, or whether it will happen in your lifetime. The American economy has an amazing ability to absorb shocks to the system. The doom and gloomers have (for the most part) been wrong since the late 1970s. They would have done far better investing in the stock market like the idiots who sleep soundly every night and think markets can only go up.
Um, Anon 3:40? Whatever you're toking, I want some. Oh, wait, I can't, because the job from hell I've just started because it's one of the only I could find in my state that might be around if the economy in my area tanks hard (again) comes complete with monthly random drug screening. I would never before have considered taking such a position (on what's left of my priciples, if nothing else) if it weren't for how horrifyingly close to the ultimate brink the U.S. econ now clearly sits. Do you have at least one back-up means of support in place (aside from your trust fund/still prosperous 401K/Microsoft shares, that is)? If not, you might want to get on that.
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