Monday, February 2, 2009


economic problems boil down to 2 things in my mind.
1. Lack of consumer spending.
2. Lack of consumer confidence.

Over the year I remember hearing the all to common refrain that Americans spent too much money and didn't save enough. We were often compared to Japan which, apparently, has a much higher savings rate.
Now when Americans get any extra money they are paying off debt or saving the money.
People often look to Japan and how thier economy is faring, yet they fail to remember the almost 2 decades of Japaneese history in the late 80's and 90's when thier economy stagnated much like ours is now. They indeed had a housing buble just as we have now. They poured billions upon billions of dollars into thier economy, and yet it made no noticeable difference. We are about to embark upon that path, but in a much bigger way, and I fear it will not improve things, but only make them worse.

Before us lies two paths. Each with the same end result. The path to the right, not coincidentally, leads to lots of pain, and I mean way more than we have seen so far, but over a shorter period of time. The path to the left leads to less intense pain, but it will be stretched out for generations. Both paths will eventually lead us to the same place. The question is, to my mind, do we want a lot of pain for a shorter time, or a lesser amount of pain for a longer period? I prefer the former!


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