Haha. Well, i heard other pundits resurrecting New Deal Economics as a better solution to handouts. Basically, make work infrastructure projects. Hoover Dam etc. In a similar vein, if we're going down the road of socialized losses, housing would get a big boost if the Government just bought and shelved the inventory. Take it off market. Then prices basement, and as they recover, slowly release supply. Come to think of it, when was the last time we heard the term "creative destruction"?!
I honestly think that some of the best feedback I've ever read on ET has come through in this thread. I will only add this; Aside from the housing bubble, the issues with mortgage-backed securities gone bad, credit default swaps and relatively high inflation we've endured (all of which are very real problems), the one thing I see when I look out over the landscape that is America is overbuilding, overcapacity, overstock, oversupply, over indebtedness, and over consumption. There are just too many damn stores, too many auto dealers, too much 'stuff,' in the American supply chain. I've often wondered how long all these retailers could survive, all these restaurants, some of them selling a product line that is pretty much 80% discretionary (if not more). Households have three, four or even five or more cars. Boats, RVs, ATVs. Peoples' basements are crammed with crap they bought because consumption is a religion. People even overeat in dramatic fashion. People rent storage units because they ran out of enough room in their garages and basements to store all their 'crap.' I am not making a moral or ethical judgment on the level of consumption in this nation. I am stating that the real danger to this nation, and indeed, the global economy, is that we have a supply-consumption chain that, as of the present, is predicated on the assumption of continued over-consumption. And therein lies the problem. When confronted with $4+ gas prices, Americans cut back the number of miles driven by 12 billion miles (a record) in the first half of '08. When confronted with high heating oil or natural gas prices, Americans turned the thermostat down. When confronted with high grocery prices, Americans went to discount clubs, bought fewer groceries and switched to generic brands. AND THOSE ARE NECESSITIES, NOT DISCRETIONARY ITEMS!!! Imagine how much more Americans will be able to cut back on the discretionary items if the economy continues to weaken. George Foreman Grills, outfits for their poodles, $80,000 Searays, figurine collections bought by shopaholics on QVC - I could go on, but I won't - Americans can tighten their belts A LOT more. If Americans even cut 15% from their budgets, and if those who have good jobs fear for their job security and tighten the belt, a lot of the 'stuff' that supports the supply chain, and everything affiliate with it, and the global economic means of production - well, then you'll see money stop circulating, no matter what the Treasury Department and Federal Reserve do, and you'll have very bad times. So, does anyone dispute this, or think I'm wrong, or think that the American Consumer is and always will be bulletproof, even in the face of shrinking lines of credit, tightened loan standards, a desire to pay down debt, a failure for real wages to keep pace with real levels of inflation, etc.?
I don't see anything wrong with your analysis. At some point, we will have to 'pay the piper'. Whether that's now or two years or 10, I'm not sure, but the piper will be paid. Led by our governement, we've painted ourselves into a corner that was built on consumption and debt. I don't think there is any room to expand that further, so it seems a consumer slow down is coming. It's needed and in the long run will be healthy for our country, but in the near term, it will be painful. When enough people put off buying the new iPhone, eventually it will hurt Apple. When enough people cut back on eating out, it will hurt restaurants (and their employees).
If my memory serves me correctly, Julian Robertson went big time into the "tech market" at the very top......lost his ass.... Not critizing as he has made tons of money, but just pointing out everyone makes some big wrong calls.... SteveD