Not sure if any of you take David Rosenbergs "Breakfast with Dave". Very worthwhile daily reading. Here is something from yesterdays letter that should really put things into perspective about at least the near-term to intermediate future. THE FRUGAL FUTURE IS A PRESENT DAY REALITY Great article in the Economist on the secular post-bubble shift from frivolity to frugality â Trading Down â From Decadence to Discounts. Very deflationary stuff. Between 2000 and 2007, the average American raised his/her consumption by 44% and this accounted for 77% of the overall growth in GDP. It wasnât just a housing bubble; it was also a leveraged consumption bubble (this did not happen in Japan, by the way, which is why the situation now is even more troubling). Fully $500 billion of consumption was funded by taking cash out of the home during the bubble, and about $1 trillion of the windfall was used to purchase even more real estate and equity assets â it was all totally illusory but now we are paying the piper as spending patterns reverts to the mean. Real-life examples are Tiffanyâs 62% plunge in its Q1 earnings at a time when âvalueâ recession-hedge retailers like McDonaldsâs continued to ramp up earnings growth as it has done each year since 2003. I have been of the view for about a year now that the post-bubble world was going to involve a significant shift in consumer attitudes towards credit, homeownership and discretionary spending. This is clearly occurring in the automotive sector, where the 20% of three-car families are becoming two-car families, and the vast majority of two-car families are either downsizing to one vehicle or are doing everything they can to extend the life of their current car/truck/SUV. See Nationâs Love For New Cars On the Wane: Signs that Slump May Become New Normal on the front page of the Sunday New York Times. This secular decline in the automotive sector may be something the American taxpayer might want to be aware of as it is forced into the position of being a 70% equity stakeholder in GM. "It wasnât just a housing bubble; it was also a leveraged consumption bubble"