If you are right and a recession or worse is coming, what should people do?

Get out of some markets? Buy Euros? Buy gold? Buy fixed income investments? Don't think I need to ask about real estate.

So...playing with interest rates is the "only" way to stimulate an economy, huh? The constant mantra from the econ media has been to purposefully ignore anything even remotely resembling the government providing active stimulus to the economy, ala actually increasing wages, or, God forbid, actually having anything like an industrial policy for America. One very recent example is the intentionally slanted reporting in Chicago T.V. media, bashing the passage of a local living wage law. And how those big bad Target stores just won't like it, oh naughty naughty.

Another reference to Econ 101 propaganda, it seems that recent texts have finally dropped that LIE about the stock market having the creation of jobs somehow as one of it's goals or side effects. Anyway...

Yes, I realize FDR is not in the White House. But it is precisely the econ media who was so scared to death of having Al Gore appoint the next FedHead. Well, you got what you wanted, another Greenspan Clone out to starve Main Street and kiss Wall Streets you know what...

And as for that Econ 101 presupposition that state influenced or directed economies are not efficient distributors of resources, guess again. Case in point being the modeling of entire weather systems via Super Computer. If we can do that, and we very accurately do, an entire economy is not far off. Just ask that Computer Science Department of yours. If you tell me about how the Soviets supposedly failed, get a clue, we out spent them on defense, period, and in the process drained their state run economy. That is all we honestly freak'n did, wow, what a "victory" for Capitalism, big glorious deal. Go re-read your Chomsky instead of laughing at him.

And anytime people start quoting the notorious Milton Friedman (aka Dracula), run for cover!

You don't have to be an economic wizard to know that a country can't go on borrowing most of its money, importing most of its goods and services, and producing nothing, and still have a healthy ecomony. If you step away from your flow charts for half a sec you may notice that the working class has already fallen into the abyss, and the white collar middle class is clinging to the edge by its fingernails, about to follow. Once consumers have no money to consume things, the US will look a lot more like Brazil. But, mercifully, by then we'll all probably be annihilated by global warming side effects anyway.

Workers are consumers!

If you fire tens of thousands of workers by offshoring manufacturing to Mexico, India and China -- didn't you also reduce the purchasing ability of tens of thousands of consumers?

If you reduce wages by two, three or even four or five dollars an hour for hundreds of thousands of workers --- haven't you also reduced the purchasing power of hundreds of thousands of consumers?

Cut wages. Cut health benefits (forcing workers to spend $500 or more a month on insurance instead of manufactured goods). Increase housing costs through the roof. Do all of this and you've bankrupted consumers.

This is the common sense logic Conservatives do NOT understand!

"Hey! We can either increase quarterly profits by selling more products or by simpling eliminating health care benefits and slashing wages! Let's just slash wages. That's at least a gauranteed boost!"

Do consumers spend more or less if you reduce their wages? They spend less.

Do consumers spend more or less if they get fired? They spend less.

Do consumers spend more or less if you increase credit card interest rates? They spend less (instead of buying an iPod now all their money is going to pay the minimim payment on their VISA card which they had to use to buy gas at $3.25 a gallon because, hey, they've been broke ever since the company cut health benefits and now all their money is going just to pay for medical bills)

Do consumers spend more or less (on manufactured good) if you triple their medical costs? They spend less.

Conservatives just cannot understand that workers ARE consumers and you can't bankrupt (fire, downsize, offshore, rape, etc) workers without hurting consumers!

No wonder we're heading for a recession where the majority of American consumers simply can't afford to buy anything!

But there is a part of me that thinks that some value could come from a deep recession or depression. Maybe it could shake us out of our collective self-centered consuming ways. Maybe it would encourage us to rethink the social contract and reduce war spending to invest in progress, rather than destruction. Maybe it would actually be good for the environment.

I'm not really hoping for people to be in pain. But the relatively short-term economic pain in the U.S. of a recession may not be equivalent to the death and destruction we are wreaking on so many parts of the rest of the world thanks to our profligate ways.

I am adding to the 3 factors that may bring about a recession.

The rising cost of health care deductibles and co-pays is affecting American pocket books at about the same rate as the rising cost of gasoline. This coincides with wages barely being raised more than inflation. This means less disposable personal income.

The huge purchase of automobiles in the last two years will subdue auto industry sales for the next few years, especially given that automobiles are much more reliable than in the past, and that owners will hold on to them longer to take advantage of the automobile’s warranty. Though this means more personal income, it stagnates the growth of the auto industry.

Taxes, possibly disguised in the form of user fees, are being put in place to cushion the loss from federal, state, and local taxes. Though federal, state, and local taxes may not increase much, if at all, these other taxes will. This again means less disposable personal income.

The march of China’s industrial growth can only continue to take with it higher paying American jobs. These jobs, when replaced, are generally replaced by lower paying jobs. This again means less disposable personal income.

One can go on, but I’d like to close with one more not-so-obvious factor.

The malaise in this country, because of the continuing “war on terror” (and its accompanying vile partisanship), is sapping the positive morale from its citizens. Within any organization of people, morale is one of the most important constituents that can breed success. With no end in sight for this “war on terror”, confusion takes the place of positive projection. Malaise leads to a lack of enthusiasm and thus a lack of production. - AGJ