Happy Holidays

The current common wisdom, as heard from government spokespeople and the media is that the economic crisis is stabilizing. According to them we will have another couple of bad quarters and then the economy will begin to expand again. This is ridiculous.

The defaulting of leveraged debt continues to increase and there remain a couple of hundred trillion worth of these babies outstanding. These loans weren't made with real money and nothing to collateralize them with but layer upon layer of more leveraged debt. Residential real estate prices continue to drop with commercial and agricultural markets still to follow. While consumer spending is way down, personal savings rates are near zero and unsecured credit card debt is still skyrocketing. Foreign trade deficits, while decreasing, are still high and as a percentage of GDP may actually be rising. Presently, what we are exporting is equity in American business and it is being sold at pennies on the dollar. The only sector of the economy that is expanding is government spending. The sector that is decreasing the most dramatically is government revenues. If you look at a chart of the monetary base on nearly any scale, it shows a parabolic rise.

Many in business, government and academia are rightly realizing that we are currently in the worst economic crisis since the Great Depression. What they don't recognize is that this crisis is just getting started. It might be years yet, before things really play out and a generation or more before things start to improve. There is no money to support the kinds of services and benefits that people take for granted and politicians promise to increase them. Standards of living continue at all time highs, while the average citizen continues to go deeper into debt. We continue to spend more money on our military than the rest of the World combined. We are defending an America that doesn't even belong to us anymore. The American family has fewer children than at any time in it's history and access to education and information is vastly greater than even a few years ago but illiteracy is at an all time high and rising. A Chinese child whose family lives in a provincial area, in one room, on an income of a few dollars a day, receives a better education than the majority of American youth. Things aren't just getting worse. We're still making them worse.