Holding neither a a degree in economics, nor a job as a professional in any business in the financial services sector, I can attest that these are not necessary when reading the tea leaves to predict the future of the U.S. economy. Reading the news, business, and opinion pages of the Wall Street Journal over the last few years, and augmenting this with other reading materials, let me submit a few observations as an unaccredited lay person.

More money is made from handling money itself rather than from manufacturing. The former based on debt and speculation, while the latter creates real economic prosperity through exportation of tangible goods and services. This behavior is historically typical of impending economic decline.

Americans spend 125% of their incomes. While this may seem pale compared to the British, who spend 155% percent of their incomes, this is not a sustainable model.

GDP includes all expenditures, even those mired in deficit spending. Our trade deficits with China, a country financing our consumer spending, along with what we're spending on the so-called "war on terror," creates an artificial "GDP" that just accelerates our ever-increasing debt.

And for those who think that capitalism is just a "force of nature," please note a few other "benign" actions of government:

While holding lower and middle class Americans accountable to their debts by restricting bankruptcy protections and upholding often corrupt mortgage practices that continue to squeeze these people, the Bush administration has sought to limit shareholder lawsuits, limit corporate taxes, and limit corporate liability on a number of other fronts.

There is no such thing as "free trade," or "open markets." Anyone who still believes this claptrap is one of the few still benefitting from financial inequality.

As we watch jobs shift around the world under the guise of these so-called globalization attributes, the rich in the financial services sector continue to get richer, and those of us in labor... i.e. manufacturing, IT, and other services sectors, continue to get poorer. And it is these same people who complain about "welfare" and "nanny-states" who still reap the (hopefully) ever-declining rewards of corporate welfare in the form of "bail-outs" or "cash infusions" into the financial markets.

As a casual observer, this system is completely rotten and corrupt, and probably will implode as it seems beyond correction.

Looking forward to 1929, I remain. That will probably seem like a cake-walk compared to what we're now facing.

When I started looking (with no chance of putting together a down payment for 5 years or so) for houses, I stepped into a strange and surreal world of extremely friendly people who gave me, even then, a sense of doom. The day I walked into a real estate agent's office, she told me that I could get a loan with 0% down, and then she took me to her friend, a lender. He looked at my assets (I owned nothing except a 25 year old car--I had just left grad school) and said that I could buy a house in a range that left me breathless. I mentioned that I was not a US citizen nor a resident alien (I was in the US on a legal working permit), and they told me that in the US anyone can buy a house. I mentioned that I was single and that I had no guarantees that the job that brought me to the area would last, and they assured me that I could sell in a year if needed. In tandem with the lender, the agent took me to houses that were palatial (in my opinion)--they were gorgeous homes with numbers of bedrooms that a single woman with two cats would have no need for. When I mentioned that I did not feel comfortable buying a home that would lock in 60-70% of my monthly income, they offered ARMs and 40, even 50, year mortgages.

Are you not an adult? Making a purchase that takes 70 percent of your income when you have not, over the years, managed to save even 5 percent of that amount? While living in a foreign country? With little job security? Fresh out of grad school?

I'm no fan of the Fed's program of in effect devaluing the dollar to bail out irresponsible lenders, but this handily demonstrates the fact that for every irresponsible lender there is an equally irresponsible borrower.

"Strictly speaking, a derivative is a financial doohickey whose value derives from some underlying asset. A mortgage loan is an asset. A pool of mortgage loans grouped together into a security that can be traded on markets is a derivative."

Strictly speaking, Andrew Leonard gets it right and then immediately wrong. All financial instruments are based on pieces of paper which slice up assets or cash flows. A share of stock is the ownership of a zillionith of a company. A bond is just a loan that is chopped up into bite sized pieces. Stocks and bonds aren't derivatives. Neither are pools of assets or shares of mutual funds.

Derivatives aren't little pieces of real things. They occupy a less tangible realm -- pieces of paper whose price depends on the price of something else. A simple derivative is a stock option whose price is based on something you could buy or sell, but other derivatives are more complex and are based things that can't be bought or sold.

In general, securitization is a good thing. In the bad old days, banks held mortgages, and your interest rate depended on what the local banks were charging. You got 3% on passbook savings, and borrowed at 6% and the local bankers pocketed the difference. Things are just more efficient now, and no one seriously thinks vanilla securitization is a bad thing.

However, it was just too tempting to see how far securitization could be pushed. Think of stage 1 as putting assets on a chopping block. You start with an onion or a piece of garlic and end up with nice little pieces -- and everyone knows what they are. I suppose you could use a food processor or blender. Then someone turns the blender on puree and tosses in whatever is in the fridge. And someone else decides to reverse the process and turn the goop into things that sort of look like food, but not like anything found in nature. And I suppose you could find someone to certify that they contain the same number of calories, vitamins, etc. Then, someone decides that the newly created goop is more valuable then the various pieces. Sort of like all those bizarre cuts of steak that are showing up these days (just what the hell is a cowboy cut? where's my tbone?).

The problem with securitization is that what was supposed to make things better (slicing/diceing with a vegamatic) went too far, and overpaid financial engineers made it impossible to figure out exactly what was in the pooled assets (lack of transparency). And so on and so on until you end up with antifreeze in the toothpaste.

Derivatives have other problems -- you have to collect from your counterparty -- but that's another story that will end badly.

Toss in a lot of leverage and that explains some hedge funds going belly up. That, by the way, is a good thing. You can't get rid of excess without a little blood in the streets. Pooling tends to reduce risk, leverage increases it.

Not a bad article, but we don't have a real crisis. Yet.

No real point in this letter, except to get rid of the stupid gambling analogies and think of it as food. Stay out of the financial McDonalds and head over to Whole Foods.