What can we do?

Is this an economic (ECON 101) or emotional subject? As it turns out, when we get into it, surprisingly, it is both!

It's economic when we spend beyond our means and have to later play the piper. Its emotional for exactly the same reason.

The getting into it is the hard part. Only a true nerd could feel reward in its study. So why should we post? The cliff is why. Or maybe we should say was why. The cliff was/is a metaphor for a bankrupt America. But is this not just a political "scare" term? Uncle Sam has easily borrowed as needed for decades and it is no different now. A Bankrupt nation cannot do that. But even a rich nation can shoot itself in the foot, or walk into quisksand.

What follows is out of Econ. 101.

• Bubbles In Brief.
• Austerity Effects: Historical Perspective.
• Morality Play: Or what?
• Will we ever learn: ?

This economic mode has been growing for some decades now and has remained relatively healthy even as our economy rocked back and forth with the times. We visited Wiki.answers.com/Q and downloaded the following and added our commentaries.

Carmen Reinhart and Kenneth Rugoff

Book Review and Commentary

“This time is different,” is the litany of the gamblers, otherwise known as:

• Chieftains of banks too large to fail,
• CEOs of large decaying industries,
• Congressmen and congresswomen only in it as a stepping-stone to K Street.

Updated 18 Sept 2012

A Great Recession began five years ago with the folding of New Century Financial Corporation. The signs are now clear that our future (for perhaps a decade as in the Great Depression) history may be repeating itself. It is easy to blame Obama, but it is equally evident that special interests reign in Washington that are stronger than any one man or woman. For example, the premier statesman of the 10th Century, Franklin Roosevelt, could not quickly right the economic ship of state. It took WWII to do that. Nevertheless, his reforms laid the groundwork that led to America becoming the greatest economic hegemon of all time.

First, some background from the outside looking in.

Updated 31 July 2010

If you hold a typical mortgage of $180,000 on your home and perhaps $20,000 in all other credits due, then the personal indebtedness for a household of four, is on the order of $200,000 See average mortgage balance and US population for the numbers. Total personal debt per citizen in fact works out to about $54,000. Each citizen is also liable for the National debt as well. That liability works out to about $42,000. Perspective comes by comparing this debt to our savings per citizen of about $1,600. see USA Debt Clock for the details in your time frame.

To gain and retain high office, politicians have also piled on liabilities, such as Social Security which they promptly stole from to fund other programs. Adding Prescription Drugs and Medicare to Social Security brings our per-citizen liability to an astronomical $350,000. Our personal and national liabilities now add up to over $400,000 for each of us. Clearly, something will give.

Robert Rubin, Alan Greenspan, and Larry Summers each made significant errors that accelerated the financial crash of 2009. But the crash would not have happened but for the architect and his masters. John Dugan was the architect; as a Treasury official in the administration of George Bush. He created a master plan in 1989 that Bill Clinton picked up and put in place under his deregulation drive.

John Dugan was appointed Comptroller of the Currency in 2005 by George W Bush. Dugan is chief regulator for the largest US banks, those now known as "Too Big To Fail." He is still on the job, working for his third master.

Obama's challenge upon taking office was to prevent a string of massive failures that could take the nation down with them. Obama avoided that disaster but the sword of Damocles still hangs heavy over our heads. If that condition is not fixed soon, another crash will surely happen again, with consequences that are as dimly lit as they are dangerous. Read on for further commentary.

Housing market seems to have bottomed out and stabilized at fair values from its ”bubble high” in 2007. It is once again competitive with rentals. New sales are picking up. Most commentators see possibilities. Housing market is a strong leading economic indicator.

THE BRIDGE TO A GLOBAL MIDDLE CLASS Kluwer Academic Press; Walter Russell Mead and Sherle Schwenninger, Editors, 2003

Book Review

Democracy seems to promote peace with other democracies, at least so far. But democracy is not a given; it requires an infrastructure and a middle class to operate it along with strong traditions of adherence to a legal system based on a constitution. The political evolution of the last two centuries has been one of gradual industrial development first, a natural transition to democracy of some form then typically follows.