This Isn't a Recession, It's a Collapse

The author clearly cannot even define depression, recession, or collapse... Let alone comment on what state we are in...<p>Useless. Amateur Hour.

Articles like this have me nodding 'yes, yes, yup, sure, yes' while I'm reading them. But by now it's just too easy to write them.<p>What I'd like in such articles is some root-cause analysis and at least a few pointers on how to proceed.

To be clear, we just went through a Panic. This is what happens.<p>We recovered from the Panic and now we are going through a Recession. There's no collapse as far as I can see but like any panic, it sure felt like we were close to a collapse.<p>State governments were completely unable to cope with the sudden, significant decrease in funds: California and NY are in big trouble.<p>But it's not a collapse. People should start reading about the other major panics that the US experienced instead of just reacting to the current one. Turns out it's not as bad as what we went through before. But it is bad.<p>The Housing Bubble will unfortunately go down in history with Tulipmania, the South Sea Bubble, and the the Great Panic of 1873. We'll recover but unfortunately, it's going to be slow treading and state services will be cut significantly even while federal services will likely expand.

I think collapse is a <i>very</i> strong term.<p>The way see it is that the recession is going to be long, very long. But it wont be a collapse. We will see state after state, company after company, country after country hit crisis and be bailed out.<p>The crucial thing is this will happen in sequence rather than all at once.<p>We survived a major banks crisis earlier this year and can probably survive another similar crisis without the world going to ruin.<p>Im predicting 10 years to recover from this myself. Any other predictions?

In an economy, there is alway work to do since we live in a world of scarcity. So eventually, the economy should pick up in employment after reallocating resources.<p>However, if a market persists in unemployment rate long after a recession than there are forces preventing pricing changes and the reallocation of resources. Such forces are often government regulation or bailout, maybe perhaps stubborn unions or cartels.

At least the banks are back in business, which is unfortunately essential to recovery. First order of business is to force them to severely lower their margins. Mortgage rates need to be heavily regulated to prevent further disasters on the housing market. Wall street needs to be regulated into oblivion. As long as they can afford to give out a single bonus they can handle more regulation to stabilize the system.<p>To be honest, I think the recovery will be surprisingly fast. Economic cycles are not what they used to be. At this point in history our economic infrastructure has become so sophisticated that within no time you will have an dramatic amount of new business starting to carry the weight of the economy.<p>It's like a forest fire. First there is the pain, then there is the barren wasteland, but then you see the new light opens up the seeds and the ashes of the old forest feed the young trees. A new forest appears in no time.

&#62; The sawdust of debt, and the monetization of assets rather than the production of goods, continually came to define the internal composition of the system.<p>Ah, those lovely Americans. Always clamouring for the lost paradise of an industrial economy.

It doesn't help that: State Tax Revenues at Record Low<p><a href="http://www.nytimes.com/2009/07/18/us/18states.html?_r=1" rel="nofollow">http://www.nytimes.com/2009/07/18/us/18states.html?_r=1</a>