Monday, April 6, 2009

The financial system has suffered a blow unlike anything since the Great Depression

From Bubble to Depression

It appears that both the Great Depression and the current crisis had their origins in excessive consumer debt -- especially mortgage debt -- that was transmitted into the financial sector during a sharp downturn. It appears that we're witnessing the second great consumer debt crash, the end of a massive consumption binge.

Posted by devo @ 11:12 PM (708 views)
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2 thoughts on “The financial system has suffered a blow unlike anything since the Great Depression

  • It wasn’t a consumption glut, it was a production drought. It matters not how much you consume, if you produce enough to satisfy needs. We don’t need a fall in consumption, we need investment in production. Unfortunately, banks are only interested in speculation. Reduce taxes on the productive sector, Install tariffs against places that choose to competitively devalue, like China, and we could double our standard of living. Banks would then follow, because they don’t lead, they speculate.

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  • Regardless of how much you produce, you can’t have consumption paid for by debt of the magnitude of the last few years.

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