World wide production is expected to shrink by almost 3% in 2009.
While house prices are falling, the houses themselves are no more affordable than last year.
Income and employment are also falling, and mortgage rates are inching up.
The institutions with mortgage money to lend, have increased the level of scrutiny and the criteria necessary to grant loans.
They have learned to be much more careful to whom they lend money, thus trapping potential buyers between falling incomes and a more stringent lending policy.
Consumers are cutting back. They are no longer exhibiting the ” keep up with the Joanes’ ” mentality, which has ruled our society for the better part of 40 years.
Smaller houses are in : more affordable, easier to maintain.
Less utility and energy consumption is in.
Smaller more energy efficient automobiles are in.
More modest vacations, including stay at home planning is in.
More modest retirement plans are in.
Public colleges are in.
Two year community colleges are in.
Moving back home by children and grandparents is in.
Saving is up from 0% to almost 7%, while spending has steadily declined.
The vast amounts of liquidity being pumped into the system by the government has created an illusion of new economic growth, but without a return to consumer consumption, there can be no lasting recovery .
Anything else is just that, an illusion and false reflection engendered by government printing presses and the shuffling of funds between the Feds and the States.
The “green shoots” they talk about implying the beginning of a recovery, is a marketing gimmick. A way to create a false sense of economic recovery, to encourage consumer spending.True growth can only begin to germinate when that which we have broken gets repaired and renewed. A long and painful process, destined to drag on for many years.
THE DANGER IN OUR FUTURE
More Later
My puppy needs dinner and a walk
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