Aloha, my old friend!

re: the real problem isn't that consumer credit is unavailable. It's that the average US worker hasn't gotten a real pay increase since 1976

You are, of course, correct.

I made an attempt to express this, here:

http://tinyurl.com/6dpt3b

A: A lawsuit

Lawsuit claims Citigroup was running a "quasi-Ponzi scheme"

Citigroup Inc., the second-biggest U.S. bank by assets, was accused in a lawsuit of repackaging unmarketable collateralized debt obligations it held and re-selling them to itself in order to hide its exposure to the securities.

http://www.app.com/article/20081203/BUSINESS/81203042/1003

...we aren't going to be buying cars -- or much of anything else -- from anyone.

So keeping Detroit afloat artificially, while it may save jobs, does little to change its long-term prospects. At the same time, allowing it to fail creates a bigger unemployment catastrophe.

The only viable plan, to me, is to invest in Detroit, but not so that they can simply continue making personal vehicles that no one will ever be able to afford to buy. Detroit's future lies in retooling for producing mass transit vehicles, like high-speed trains.

Unemployment is going to get worse, because the economy is going to get worse. The entire basis of our economy has been consumer spending fueled by easy credit. This is now as passé as pet rocks and leisure suits.

I have opined many times that the present ship of state is akin to Titanic. Instead of wasting any more time vainly trying to pump the water out of the hull, we had better quickly get everyone into a lifeboat and row like hell, lest the ship's sinking suck us all under.

re: the consequences of the failure of the US auto industry would be similarly larger than it may initially appear

If the oafs like Sen. Shelby and the nitwits who complain about the fact that auto workers are paid a decent wage get their way, they'll find out very quickly how devastating those consequences will be for all of us. The Big 3 collapsing will pull so many downstream businesses under that even those foreign automakers who may survive will have a tough time getting the components they need for their own production.

re: the open-ended production-consumption economic model isn't sustainable anyway...but...it hasn't yet crashed into certain hard ecological realities.

We may not have to wait for the planet to slap us into submission, since the open-ended production-consumption economic model is crashing spectacularly on its own. I guess an economy built on a mountain of debt has its own limits.

re: We also need to revisit the controversy over how much workers should get and how much non-workers and corporatists should get, because it's economically and politically unhealthy for that distribution to be so lopsided

It may become literally unhealthy -- and quite soon -- for the oligarchs. If the masses are pushed into homelessness and starvation, we may see a repeat of scenes from the French Revolution.

Fox Business: Gerald Celente Predicts Revolution

Celente says that by 2012 America will become an undeveloped nation, that there will be a revolution marked by food riots, squatter rebellions, tax revolts and job marches, and that holidays will be more about obtaining food, not gifts.

http://www.youtube.com/watch?v=46MEqEgdLTg

re: The problem is how to get from here to there

The bigger problem, to me, is that we're rapidly running out of time to make any sort of thoughtful changeover. This thing is unraveling faster than the Fed can print dollars to prop it up. There is also the rest of the world that's going under at the same time, and as bad as we will have it, other countries are going to be in a lot worse condition -- and some of them have nukes.