Don't play in the street

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  1. Sorry but I think you are grossly mistaken and naive about the consequences. I think America WILL sink in to a deep depression because the vast majority of Americans are in EXACTLY the same kind of fiscal distress that both Wall Street and the Federal Government are in.
    Americans have ZERO SAVINGS and that is a fact, what REAL ASSETS they have are in their plummeting home values and investment portfolios, there is no real liquid cash to fall back on when people lose their jobs in droves.
    You’re in wishful thinking land if you think the average American is financially sound enough to absord the effects of major job losses and a glut of credit in the market when the very core of Americans’ purchasing power is CHEAP CREDIT.

  2. Yesterday the US experienced the largest bank failure in US history with WaMu going under and it was under the headlines of the bailout. I would be inclined to take a more populist view of this and demand economic justice if banks weren’t going to continue to fail. Eventually people are going to panic, credit will freeze, regular middle income people like you and I will be unable to buy a home, buy a car or get a loan to send our kids to college. I think Sijui exaggerates the point a bit but unfortunately although many may think that credit is something you only need sometimes to buy a big screen TV, many people use every day to continue economic growth. They use it to start new business in distressed neighborhoods, they use it to buy larger homes to create more space for their families, they use it as a tool to allow them to wield more financial muscle as an outlier rather than in the moment. To take that away or to create a situation where ONLY people who have lots of cash on hand can get credit will hurt our country and certainly raise unemployment. To me, as a father, I want to be able to send my daughter to college no matter what. I don’t care if I have to work 10 jobs but she, like me, will go to college. What about those kids who need loans, scholarships, aid who wouldn’t be able to go because of a 10 year economic recession? I think people wish an immediate guillotine of economic justice will hurt the Wall Street fat cats, but ultimately, I think it will hurt our country far more deeply with the weakest and those with the lowest economic status the worst.

  3. Punditdad —
    I hear you. As a mom, I’m terribly worried about the what the future will hold for my child also. And I’m also committed 110% to her attending college.
    But my concern for her (and her generation, and those to follow) goes way beyond that. I’ve spent the years of her childhood fighting back as hard as I can against the rampant consumerism, as the parents of her peers buy their children televisions for their rooms, and iPhones, and cars. (Did I say cars? I meant… NICE cars. NEW cars.) Worse, these families are extending themselves, financially, to the sharp edge of disaster to realize these things for their children — who neither appreciate these things, nor actually need them.
    In my own neighborhood, I’ve seen more than one family go over the edge and have to move, and another is about to join them. Does it matter that my neighborhood is expensive, with outsized houses and inflated self-worth?
    I think it does.  In fact, I think it typifies the problem.
    All across America, people have been making choices like these. We’ve got an entire generation coming up now with outlandish, unreasonable expectations, and all the propping-up in the world won’t save us from ourselves.

  4. I’ve spent the years of her childhood fighting back as hard as I can against the rampant consumerism…

    But, I thought that we were supposed to “shop ’til they (the terrorists(=) drop”! Wasn’t that the plan, post-9/11?
    In the ’80s, it was the S&Ls, as they got into risky investments (commercial real-estate) in pursuit of ever-higher returns for their shareholders.
    In the ’90s, it was the dot-coms, as they entered financial fantasyland in pursuit of ‘eyeballs’ and ‘hit counts’ and the next round of VC financing.
    In the ’00s, it was the banks and investment houses, as they got tied up in risky investments (sub-prime loans, CDS, and a whole mess of alphabet soup) in the pursuit of higher returns for the investors.
    In all of the cases, real people also got hurt, as they learned (again and again) that ever-escalating home values and cheap credit are NOT a Constitutional right.
    Those who fail to learn from history…

  5. EdT — We’ve been moving investments around for some weeks in preparation for this, but even so, our portfolio also bled copiously yesterday. Did you think I was kidding when I said this would hurt?
    But the dizzying heights to which the DOW (and other indices) had climbed were, imo, akin to the housing prices. And even helium balloons eventually come back down.

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