The new reality

There’s no way in hell that the economy we enjoyed for the last 25 years is coming back. No amount of stimulus, tax cutting, free trading or anything else can bring it back. It was an unsustainable bubble created by a deregulated FIRE economy (finance, insurance and real estate), denial of risk and an unprecedented use of credit and debt. It’s amusing to watch the pundits slowly catch on, but only ever so slowly.

The economy of the last 25 years is no more going to bounce back in a year or two than the NASDAQ. It was widely believed in 2000 that the index would be back to its’ peak in a matter of months. I was literally laughed at for saying it could take a decade. Looks like I might have been too optimistic, since at under 1600 it’s off its’ peak of over 5000 by what, about 70%? How’s that Enron stock holding up?

So in my view it’s a given that credit will be very, very much more rare in the future. I’m not sure the credit card companies will be able to survive it, but the rest of us will manage to muddle through. Once again, one will have to save up to buy a car. Doesn’t say much for demand for new cars does it? Sorry Detroit.

Same for flat screen TV’s, video games, computers, MP3 players, cell phones and all the other extras we’ve come to believe we not only need, but deserve. Sorry China. Sorry Best Buy.

I expect to see a lot more cohabiting, and hopefully more niceness. When everyone is skating on thin ice financially, wouldn’t it be nice to see acts of kindness as self-insurance in the case that your situation falls apart? It’s going to be easier to crash in someone’s spare room and help with the rent if you did the same for them before your situations reversed themselves.

Here’s another thought somebody clever will come up with- a value menu at local restaurants. You know, rice and beans for a buck. Maybe takeout only. Maybe with donated ingredients. Food will definitely be viewed and consumed differently. The fast food industry is going to either adapt and change or go the way of the dodo.

The other thing will be housing. There already exists a huge number of foreclosed and vacant houses in America. It’s in nobody’s best interest for them to remain vacant. They represent a nearly worthless asset to the banks that seized them. I believe there’s a great business opportunity for someone to manage renting out rooms in foreclosed houses and getting people housed, as well as getting the banks something for their investment.

Hello? Underemployed real estate workers this is your opportunity!