"...to be active consumers once again."

I am with you except on this point. If that's the goal again, then the basic problem has not even been touched. We need an economy that doesn't exist for its own sake, which is what the consumer-based mentality is about---not satisfying human need or want, to say nothing of the wider world, but boosting the economy. An economy that HAS to grow in order to exist at all is fundamentally unsustainable, no matter how many feel-good green technologies you got running it.

...what we don't need is for the feds to hand over the money to local jurisdictions and expect them to build new infrastructure. Where I live, that would just mean handing out contracts to the same ten families who benefited from the Republican-era tax cuts. It would be far better to train and employ PEOPLE in a coordinated rebuilding of America.

Lovely explanation, Andrew. One point to add:

But let's suppose you are not underwater on your mortgage, you don't have any credit card debt, you're gainfully employed, and you are staring at a $499 price tag for a 32-inch flat screen HDTV from Sony?

The thing is, the people who are not underwater on their mortgage, don't have any credit card debt, and are gainfully employed -- I write as someone who meets criteria #1 and #2 and, sorta, #3 (self-employed) -- are very often people who got that way because they don't spend their time staring at $499 price tags for things they don't need. I'm not saying financially prudent people are angels; just that prudence begats prudence.

As you say, today the prudent will not make stupid purchases and the profligate no longer have the cash to make stupid purchases (and can't get credit). The trick is to figure out how to grow the economy again without anyone having to go back to being stupid. Which will require a different system from the one we have had.

Nice Article. However, note that the linked NYT article cites a 4 percent annualized economic contraction rate - not the 4 percent per quarter this article states. Hopefully things won't get that bad.

How about an education spending spree? The State of California is laying off teachers in order to meet budget concerns. Why don't we invest in ourselves and our children, since this is clearly a national shortcoming? Did you know that there is a staggering number of workers in Silicon Valley hailing from other countries, particularly India? With the right kind of programs, Americans can receive more education that allow them to compete in the tech industry instead of giving those jobs to foreign workers.

What we most dearly need is to move ourselves away from a market of crap. The U.S. economy should not be based on Walmart totchkes. The American consumer should be investing their Christmas money on things that matter--like better educations, healthier foods, and green technology. At least this crisis is an opportunity to reexamine the foundation of our economy. I don't think that Mr. Leonard's (tricked out SUV's) suggestion is the route that we want to take.

You make a great point about the downward spiral of smart saving consumers. They should be smart, because the government is saving the country club crowd, not them. Never blame the businesses or their pattern of destruction. Andrew, you've got to get on talk shows and speak out out this. Journalists are not asking tough questions.

But what no one seems to be talking about in the bailouts and any stimulus is homegrown jobs. The auto manufacturers beg for money holding the economy hostage to their stupidity and what will they do with it? Layoff workers here and build factories and hire cheap engineers overseas. With our "stimulus" or "bailout" money.

Meanwhile, the car companies claim they have to restructure pension agreements, but don't talk about existing restructuring executive retirement agreements. Those are contracts just as the pensions are contracts with the line workers. But we don't talk about demanding restucturing of drug benefits, annual payouts, and benefits of existing retired executives and board members, just the line labor. Funny. An executive of Verizon came out and said they have to pay on pensions and deal with labor unions and its not sucking them under, so why do we take the explanation from the car companies that it is all labor unions fault, basically, without question.

Obama mentions spending on health records - the computer and tech companies salivate - but their workers have been offshored so much and others are on contract with H1B visas. Meanwhile, tech workers that are over 40 or going back to school fresh with their "re-education" for smart jobs cannot get jobs. They advertise for workers only as a curtesy to some govt rule, then they hire exclusively from other countries or build in other countries saying we lack the talent here.

But using your logic, why should our students major in technology when companies layoff and send jobs elsewhere? If the students are smart like smart consumers, the trend is to avoid technology jobs, there is no future in it. We have laws against abuse, but no company is ever prosecuted. Ever. Ever.

Here is an interesting article on how stimulus plans & conditions of employment are not being linked.

http://www.businessweek.com/magazine/content/08_49/b4111000652752.htm?chan=magazine+channel_top+stories

We need an economy that doesn't exist for its own sake, which is what the consumer-based mentality is about---not satisfying human need or want, to say nothing of the wider world, but boosting the economy. An economy that HAS to grow in order to exist at all is fundamentally unsustainable, no matter how many feel-good green technologies you got running it.

pdxjoe: Thank you for this. I know I've long since lost this argument, but the economy doesn't keep on chugging away because I buy ONE flat-screen TV. The economy depends on me to buy that TV once, throw it out, and buy new TVs every two or three years, at six or seven thousand a pop. That flat-screen TV is going to be obsolete in about five years, and by the way, we're all going to have to throw out our carefully cultivated collection of classic movies on DVD because we guessed wrong and bought "Hi-Def" instead of "Blu-Ray" which is on an obsolete format, much as our vinyl records are sitting around collecting dust now that we've gone and paid for them. That's assuming we have any money left over after we've tossed out our computers two years after we acquired them, with all that software, because the operating system is EOL and no longer being supported and the new operating system doesn't work with any of the software we bought last month.

I've long since lost this argument. I know the economy does better when I buy teflon than when I buy a cast-iron skillet, no matter how superior the cast iron is, because the teflon will have to be tossed and bought all over again in two or three years. I know I'm not supposed to buy an actual Steinway piano that will last three or four human lifetimes, because if I buy a Yamaha digital piano I'll have to toss it and buy another one in five years. I know we're supposed to replace all of our books with e-books that we read on an electronic monitor, meaning we have to buy the books in the correct format, which by the way will be rendered obsolete in a year or two.

I am so sick of being referred to as a "consumer" in the context of purchases that have nothing to do with my consuming anything at all. Our economy should depend on the creation of real value, not on our having addicted our population to an endless treadmill of spending that exhausts every paycheck, maxes out every credit card, and finally exhausts the equity in our homes.