2009 and going forward... We didn't realize how incredibly inefficient and enormous a bubble we've just lived through with the 70 trillion dollar real estate bubble (global)...until now. That bubble wealth made it possible to lever every asset, borrow as much as businesses and consumers desired, and make incredibly risky business, personal and every other kind of investment and consumption decision known in history...the excess of that bubble rage is being delevered now, from Miami condos, to barely two year old luxury vehicles, boats and private, corporate jets going unsold at auction. A fundamental sea change is now occurring, where American consumers and businesses have a new found respect for wealth, risk, leverage and the dollar. Their knuckles will be white as they cling to their money going forward, and they'll only release their clasp when they are beyond confident that they can tolerate the worst case scenario that could materialize in the event things go horribly wrong. The byproduct of this sea change in psychology will be a lean and mean consumption pattern for years and years to come, and major crimping of economic expansion, along with large gains in productivity. The past 8 years were an orgy of incredible risk taking, orgiastic, conspicuous consumption, flawed business models, the easiest lending in the history of the world, insane leverage, and a total lack of respect for the piles of accumulated wealth built up very easily over past years (now wasted away for the most part). Things are going to be radically different in the lean years to come. Americans will be forced to live within their means, in a delevered world, with scant access to risk capital or consumer loans, and the U.S. and the rest of the world will be forced to adapt to the lean times ahead.
Good ByLoSellHi.... And what is incredulous is that many individuals will have to go through more rigorous qualifying.... Notably at a bank who lost all the deposits by poor management practices.... They want quality on the most basic front end....whereas they have lost it all on the backend....only to be rescued by poorer foreigners buying US debts and currencies....via the FED and taxes.... Rather pathetic.... Time for a New Deal....
*OR* the Fed prints money and the Government borrows it, and finds ways to hand it out so that the idiotic consumption binge can continue till US dollars are no longer wanted as currency by the rest of the world. Which do you think it will be?
Well now.... Many $Trillions have evaporated....Over $30 Trillion from stocks alone....not counting real estate, businesses, and other commodities..... With no way to replace ...in the short run.... The fiats will stay moreless in line....as the Euro becomes even more flawed....as more change would even be more painfull.... The pressure on all prices will be downwards for some time....regardless of oil disruptions....
The greatest paradox of all is that the people that governments, including ours, need to spend, spend. spend (i.e. the ones who can afford to), already have everything they need, for the most part. It will be hard to stimulate spending amongst this group when they are bitten badly and in total survival mode as they eye the basics (tuition for kids, healthcare, food, the mortgage, if any), and eying retirement with the goal of being as liquid as can be. I do believe the top 20% of income earners purchase 70% of all goods and services and consumed, and we all know that nearly 70% of the economy is comprised of consumer spending. Translation: You can lead a horse to water, but if it ain't thirsty, it ain't gonna take a drink.
The government is replacing the people as borrower and spender of last resort. The Fed's new "quantitative easing" program ensures this..
do not discount the power of the media. do not discount the power of the media. do not discount the power of the media.