What The Recent Run-up/Run-down Means:

Monday (10/13), the stock market jumps up 900 points.
Tuesday and Wednesday (10/14-15), the stock market drops back down, with all the 900 points given back.

Monday the stocks were calmed by the sudden infusion of cash from the governments of the world.
Tuesday and Wednesday it was realized that there were real problems in our economy, and that it was likely we were ALREADY in a recession (if not a depression).

Monday (10/13), the nation calmed down with relief.
Tuesday and Wednesday (10/14-15), the nation became depressed when it saw the road in front of it.

The fact is, we’re now past the “PANIC” phase, when people are selling just to sell. Now that “cooler heads can now prevail,” we’re going to discover that a lot of stuff out there is badly wrong, worse than people want to think.

Our consumer debt situation is past the furthest point a debt level can get and still keep the economy going. There were loans where people were paying “the maximum” based on pure health and perfect operating cars (and if the lender really pushed, you didn’t even have to pay off your interest portion of the loan to get the house), line-of-credits were linked to houses and expanded as the houses “increased value” and people bet on a house increasing in value when nobody’s wages are increasing. When home values started shrinking, everything fell apart…..worldwide.

And credit cards? Try this: When going to college in the eighties I couldn’t get a card (for which I’m thankful). Now they can’t wait for someone to turn eighteen for them to get cards. They’ll even harass the parents to try to give the cards to the kids, then harass the parents when the kids overspend (as is their wont, alas).

And don’t get me started on the subject of student loans…

Not only that, but we’ve set up a situation where the rest of the world was buying shares of our debt, expecting us to come through with our payments. That’s right, not only did we overextend ourselves but we ended up sending our promissory notes across the world in ways nobody can tell about (because even they don’t know how it happened).

– – – – – – – – – – – – – – –

I think things are going to get worse before they get better, IF they get better.

Fact is, we’re going to have to work a major portion of this debt through its paces before things can get back moving again. Either debts will need to be forgiven or paid back (in some way) and before that point we’re going to get a lot of people whose sole purchases will be rent, food, occasional clothing, and debt relief. Those who can will go without cars, those who can’t go without cars will learn what they can about repairing them.

Not only that, but we’ll have to figure out a way to make our own stuff. We’ve spent the past fifteen years letting China do the hard work for our enjoyment, and at some point they’ll start chafing. A society cannot survive forever with the twin jobs of foisting debt on others and shooting anyone who dares say “no” to our debt. The Taliban and Al Qaeda may be the cutting edge of the army being created push us off their lands and conquer us.

In the meantime, watch as the society slips into a recession/depression. Too much $$$$ dedicated to debt retirement; too much $$$ sent to people who exist to suck money off us, too little $$$$ for investment or relaxation, too much $$$$ owed for wages to be traded for free time.

Welcome to slavery. The legal kind, one where choices develop into lifestyle changes. Hence the 13th amendment has no power here.

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