Sunday, December 21, 2008

World Economy on the Edge of Disaster

I don't believe many people understand just how close the U.S., and world economy, is to the edge of a very deep drop into what could turn into a protracted recession. When I say that I don't mean to sound like an expert, because I'm not, and I'm also aware that the U.S. has already been in a recession for a year now, but from everything I've read it looks like the most serious economic crisis in my lifetime - nothing compares - short of the Great Depression.

What really drove this reality home was watching a documentary made by, and broadcast last week on, the History Channel of all places. After months of personally talking with hundreds of people from all across this great nation of ours tell me how bad things were where they live, and after reading hundreds of articles dealing with the economic decline the truth came together watching the History Channel's, Crash: The Next Great Depression, an excellent documentary which compares the Great Depression with the situation we currently find ourselves in.

In fact the situation is so frightening that I don't believe most people know just how dire the situation is.

For several years I've shared my opinions about the Bush Administration, and how the economy was a "sham economy", and I knew eventually something had to give. I formed that opinion several years ago while watching an early morning CSPAN broadcast in which a writer took calls after a long discussion of Bush Administration economic policy.

The general message was clear, our economy was in high gear, and everyone was happy for the moment only because a flood of foreign investment was financing the Real Estate Bubble. The question was put - as to what would happen if that financing ever came unraveled, and at that time it was clear that no one even wanted to consider what would happen.

We now live in the worst case scenario, a scenario in which banks no longer want to loan out any money.

And at this point no matter how much money has been used to bail out these lending institutions, nor how low the prime interest rate is - no one wants to part with their cash - for fear of loaning money to an institution, company, or individual which might not be capable of paying back those loans.

And thus, the economy itself is grinding to a halt. We haven't seen it yet, but if not for the actions of the federal government the U.S. economy would completely collapse.

And that is not an exaggeration - which is scary as hell.

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