Khazin: Yes, the U.S. did create a very high standard of living by stimulating consumer demand. Generations lived without having to experience poverty. But it's impossible to live forever in debt. Household debt has now surpassed the national economy — more than $14 trillion. Now it's time to pay up. Of course, Wall Street tried to postpone this collapse. I won't go into detail about derivatives and other such financial assets, but this was just a gasp for air before an inevitable death.
Another problem in the U.S. is that powerful industries were built around this growing demand. Whatever decision Wall Street takes right now, the demand is going to fall. What will happen to these industries? In 2000, we estimated that 25 percent of the U.S. economy would disappear. Today, we think the number is closest to one-third — if not more.
Tuesday, 11 November 2008
Hopefully this guy is wrong... unfortunately, it sounds plausible.