This is an interesting article/interview about the current recession

[whistle]

...and where the U.S. economy will go from here:

<snip>
“The Game Is Over, There Won’t be a Rebound”
by Mike Whitney / June 23rd, 2008
Interviewing Mike Hudson

<deep snip half way into article>

MW: Many of the TV financial gurus — as well as Henry Paulson — keep assuring us that the worst is behind us, but I don’t see it. Foreclosures are increasing, the dollar is falling, unemployment is rising, manufacturing is sluggish, food and fuel are soaring, and consumers are backed up on their credit cards, student loans and house payments. Where would you say we are in the present cycle? What will it take to rebound from the current slump? Will the stock market take a beating before all this is over? What do you think the greatest problem facing the economy is; inflation or deflation?

MH: The idea that we’re even in a business cycle is whistling in the dark. To think of the economy being in a cycle is to imply an automatic recovery is in store. This free-market idea was developed at the National Bureau of Economic Research by opponents of government regulatory policy. The fantasy is that the economy oscillates in a fairly smooth and regular sine curve. But this always has been a fiction. 19th-century writers didn’t speak of economic cycles, but rather of periodic financial crises. There is a slow buildup, and a sudden plunge, so the shape is ratchet-shaped. Today’s plunging real estate and stock market prices are not a self-correcting ebb and flow in which downturns set in motion automatic stabilizers that produce recovery. Each U.S. recovery since World War II has started out from a higher level of debt. The result is like driving a car with the brakes pressed more and more tightly. Alan Greenspan at the Federal Reserve flooded the banking system with enough credit to enable debts to be carried by borrowing against the rising price of homes and office buildings, corporate stocks and bonds. In effect, the interest charge was simply added onto the debt balance. But now prices are falling, leaving families, companies and many Wall Street firms with negative equity. Asset-price inflation fueled by the Federal Reserve is giving way to debt deflation. Today, the prospects are dim for paying off debts out of further price gains for homes and real estate. Speculators have pulled out of the market and as late as 2006 they accounted for about a sixth of new purchases. The United States and other countries have reached the point where interest and amortization payments are absorbing the entire economic surplus of so many individuals, so many companies and so many government bodies that new construction, investment and employment are grinding to a halt. Families, real estate investors and companies are obliged to use their disposable income to pay their creditors. This leaves them without enough money to sustain the living standards of recent years and they no longer can wipe out their debts by declaring bankruptcy as in times past, because Congress has passed the harsh bankruptcy law that credit-card and bank lobbies paid them to pass. This means that there won’t be a rebound, and it will take longer than 2009 to recover.

<MUCH MORE HERE>

http://www.dissidentvoice.org/2008/06/the-game-is-over-there-wont-be-a-rebound/

[Oregone]

1. Who in the right mind truly thought it would recover in 2009?

Does no one realize where that last decade has been taking us? We are past the point of no return, on a kamikaze mission into poverty.

[sshan2525]

2. Whitney's been right on just about everything lately

He was way ahead of the curve on the sub-prime mess. I'm worried.

[raccoon]

3. Thanks for the link. nt

[truedelphi]

4. There will be two classes in America, the speculaters, and the non-speculaters.

One class will be richer than GOd, and the other class will be poor.

Of course if you make the wrong decision on your speculatin' you'll be bailed out, if you have the connections that Bear Stearns has.

Otherwise you'll join the poor.

[leftofthedial]

5. that's pretty much how I see it

we are at the anus end of a long feast by supply-side, "free market" pigs. The bills for all their myths and failed economic ideas are coming due all at once. Yet one more arena in which "conservative" ideals are proven to be dead wrong.

[whistle]

6. That pretty much sums up the way I've seen it as well

[Deb]

7. 30 years ago, we'd call that "livin on love"

"Families, real estate investors and companies are obliged to use their disposable income to pay their creditors"

It isn't disposable income at all, just an extension of indebtedness that props up a false standard of living or stock performance.

The party is over, I'm so thankful to the posters on DU that helped me prepare for this inevitability. :hi: