I'm not going to get into an argument or "debate" in this thread. I'm just going to post my (grim) economic worldview. You can believe it or lump it, or hopefully something in between. If it helps, pretend every sentence starts with "IMO." And I don't claim to be particularly smart or knowledgable on the subject.
This is not a temporary problem which will go away with a change in President, a change in Fed chairman or a withdrawal from Iraq. It is not limited to the housing market, either. And it has only begun.
You have to ask yourself WHY lenders were giving loans to people who couldn't repay them. To do this in a free market would be enormously stupid. Why give away money you don't think can be repaid? The market is manipulated by the Fed, of course. They set interest rates, creating tons of credit that shouldn't exist. This means all sorts of people can buy homes cheap, and since the real estate market has had consistent, stable growth, all sorts of people get in the market as an investment rather than to own a home or place of business. The buyers market gets crowded, prices go way up, detached from realistic values, and a crash becomes inevitable.
The stock market is in the same position now. Congress admits openly that their "stimulus package" is for "the people who will spend it the quickest." In other words, as elected officials, they can't give money directly to Wall Street, so they turn poor people into the middlemen to hand it over to big business as fast as possible, and when we eventually have to print the money that Congress and in turn those poor folk already spent, they automatically become poorer as the dollar is devalued. (I'm not blaming this one action; the bulk of our policy ends up pointing this way.) But Wall Street keeps growing, and so the whole world invests in Wall Street focused on growth instead of profits. The purpose of real estate is to live or do business on; the purpose of stocks is to receive dividends. The purpose of neither is to "buy low and sell high." And so the buyers market gets crowded, prices go way up, detached from realistic values, and a crash become inevitable.
But its hard to blame the retards in there now anymore than the 80 years of retards before them, and stupid to think the next retards can stop all this. This is the inevitable result of central money planning. No secret board of bankers can plan the whole economy. They'll inevitably manipulate the market in unintended ways, and when things get bad, they'll serve their own interests first.
Which is why, right now, the only indicators that still look okay are their bogus propoganda indicators. "Core inflation," the Dow and the rest. Don't be fooled.
I personally think a long term depression is looming, and will strike sometime in the next ten years.
There will be ways to avoid it. Cheap entertainment like videogames will do well, for one. We're seeing how they're "recession proof" already. Liquor will do well. Gold will hold stable as world currencies plunge (though it will be worthless if people don't have food).
So, uh, that's my grim economic worldview.
