Letters to the Editor
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A Hard Rain's A-Gonna Fall
Our entire economy is built on unsustainable levels of debt. The national debt under Bush has nearly doubled and the deficit spending continues unabated. Fully 20% of the annual US budget is now dedicated just to servicing the debt. Personal debt has also skyrocketed to record levels. Americans have a negative savings rate. Now, on top of this, the subprime disaster is spreading to the larger economy. The response to this has been a simultaneous collapse in housing prices and a choking off of credit, affecting in particular the ability of homeowners to make MEWs. Without ready access to the housing ATM, which has been the backbone of consumer spending under Bush, we now see the economy grinding to a halt.
The so-called "prosperity" of the Bush years was fueled by illusory paper "wealth" in the form of hyperinflated real estate prices. This giant Ponzi scheme is now unraveling -- and there is absolutely nothing out there that's going to stop it. As a result, the true economic state of the vast majority of Americans is being laid bare: Hopelessly in debt with no savings and no way out.
At the same time, real inflation is eating away at the purchasing power of Americans. Gas, food and healthcare costs are spiraling out of control. Meanwhile, the unregulated credit card companies jack their interest rates up at will -- even for those who pay their bills on time. And while everyone was still basking in the illusion of the "Bush Boom", Congress made it infinitely more difficult for the average American to declare bankruptcy.
We're not just in for a recession. Years of financial mismanagement and policies designed to enrich the already rich and crush the middle class are coming home to roost.
It's going to be very, very bad.