Despite the best of efforts by those clueless braniacs running the insane asylum (Bush, Cheney, Paulson, Bernanke, et al) we seem to be headed for a repeat of what the 1930s depression was most commonly called in pre-internet days: a crisis of confidence. Including the legions of laid-off 1099s, illegals no longer working, folks in service, folks behind bars, etc, we are at something around 11% unemployment. Lots of folks are still working, but suddenly no one seems to want to spend anywhere near as much as they used to.
Official economists (about whom my opinion has been very low for awhile) everywhere are busy making bold predictions all featuring that SlashDot-esqe missing third step between the setup and the profit. Amusingly, some of these folks are even featured on news media, as if they have even a smidgen of a clue about what they’re jabbering about. My favorite one of these, these week, featured on NPR, was some Mass-hole economist saying that unemployment will be worse in 2009 but will then get better in 2010 “when the economy turns around”.
The beggars at GM & Ford have a similar kind of mental blank spot. They’ve been busy telling our congresscritters lately that the billions loaned to them should be considered just loans to help them get through this rough spot “until the economy improves”.
Upon what, pray tell, is this mythical economic improvement supposed to be based? No one can say. This is part of why none of them can agree on the date of this turnaround, and none of them have anything to say about what will reverse the current factors so that business can automagically improve. Just goes to show you there’s nothing new under the sun .. these folks are merely the modern-day equivalents of the fresh-entrail-readers any respectable ruler usually kept handy near the throne.
Until other factors supersede the ones currently dominating the scene, this “lack of confidence” is a steadily-burning fuse that will effectively shut down the America we have known these past years.
Investing will be replaced by saving, once enough folks are personally educated (in the school of experience, of course) about the essential gambling nature of investments. It is /not/ possible for every person in the phone book to toss $1 into the market and withdraw $2 later (at least not during normal times anyway) though during the runup phase of Ponzi-style bubbles it certainly looks like it’s possible for everyone to win.
Buying a new car every three years (and rolling the unpaid loan amount into the new loan, haha suckers) will be a thing of the past.
Buying huge homes far from work/school/stores, and the enormous gas-guzzling luxo-barges that seem to be de rigeur for that lifestyle, will become the sort of thing you’ll remember from the 00s and the television shows of the period, sort of like the way many of us remember tailfinned cars and rumors of electricity too cheap to meter.
Ditto for new computers every few years, new televisions every few years, and large plasma screens in every significant room in the house. Ditto for sales of CDs and DVDs, and perhaps ditto too for those expensive multi-thousand-channel HDTV subscriptions.
What’s going to be left of our so-called economy (when the abovementioned fluff, as well as other things of that nature, are removed from it) is fairly well known at this point. While people really do need houses and vehicles and computers and cellphones and other things, what got so grotesquely out of hand during the roaring double-oughts was was the replacement rate for these oh-so-blingy things, and without a roaring replacement rate thing going, we’re facing a much smaller economy. They say some 70% of GDP, in the recent bubble years, was based on light fluffy consumer spending.
Amazingly, even though most people still have their jobs, the flow of dollars getting spent has suddenly slowed to a trickle. The [temporarily?] cheaper gasoline isn’t bringing about a mass resurgence in purchases of large, ungainly, overpriced SUVs made in Detroit.
What’s coming next will probably be something like American Idle. Most of us will have more free time and less money. It’s a no-brainer prediction that whatever pastimes people find to occupy their time will be ones that don’t cost much. A minor upside is that certain classes of crimes are a little less likely to happen then simply because there are more people at home and more eyes peeled around the neighborhood. Just imagine, library usage will be up, driving will be down, smoking will be down, smog will be down, and folks will necessarily get serious about energy conservation because it’s a great way to save money. Ditto for growing/raising your own food. Omfg, maybe the obese ones among us might lose weight simply by virtue of engaging in less driving and more walking?
Another set of benefits could revolve around bling becoming complete social anathema. Of course perhaps someone, somewhere, could keep a little basement or garage museum dedicated to the excesses of the roaring double-oughts. Someday these things will be as amusing to us as the Gordon Gekko type late-80s excesses were by as soon as the early 1990s.