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Discussion: (4 comments)

  1. Jon Murphy

    This economy is not built to last at all. It is built to die.

    There are things to celebrate in this economy, but let’s take a 30,000 view.

    We do have a major problem of debt. It is unsustainable, and this is a global problem, too.

    The bond market is in a massive bubble. Yields are not this low for economic reasons and will not remain this low for ever. Basically, we’ve created the third bubble in 10 years (the last two being the Internet Bubble and the Housing Bubble). When this bubble bursts, and it will, the consequences will be quite dire.

    I am going to be a bit depressing right now, but then I will give reasons to be optimistic.

    The current slow-growth economy will not last. Even after the mild recession we have coming late next year, the problems will not disappear. I do not anticipate the government taking the necessary steps to reduce the debt in the next decade, and the debt problems will come to a head just as the bonds bubble is starting to burst. Massive government cuts, as well as sharp declines in the wealth of individuals will propel us into a second Great Depression, starting around 2025. Make no mistake, this will be long, protracted, and bad.

    But now for the good news: the Depression will be a good thing. Much like a computer has a reset button, consider this depression an economic reset button. The size of the government will be greatly reduced and, since debt problems will not allow, it will not be able to mess up the subsequent recovery. Real economic growth will emerge, and bring with it a wealth of technological and medical advances.

    I am an optimist because I believe in the divinity of God and the ingenuity of Man. Every day, in uncountable ways, people are developing new ideas from seemingly unconnected things: telephone + computer = Internet; telephone + Internet = smartphone; water + rocks = super-fracking. Food + science = GM superfoods. Human history is marked by nothing but achievement, and I see no reason now to suspect otherwise.

    Yes, we do have bumps and one big dip in the road ahead. Yes, it will be painful. But our future still looks bright.

    1. I am an optimist because I believe in the divinity of God and the ingenuity of Man“…

      Good comment jon, real good IMHO…

  2. MacDaddyWatch

    Built to finish last.

  3. Todd Mason

    Perhaps what you meant to write, Jim, was “putting aside the FACTS” of how the economy crashed. Zillow’s 2Q report says that 31 percent of homeowners with mortgages owed the bank more than their houses were worth — by more than $1 trillion no less. These people, no dummies, are counting their pennies. Savings being the opposite of demand, businesses (also no dummies) are setting their hands as well. If government continues its hand-sitting hat trick, we have a waiting game no matter who is president. Then again, Romney (no dummy) just might do the necessary pump priming on the double dip if he wins.

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