posted on Mar, 14 2007 @ 06:41 AM
Ah yes. The question Just how vulnerable are we, really? There are a number of domestic factors in lay that make the overseas potentials look
I think future historians will call this recession a self-inflicted wound. If we're fortunate, we can limit the damage to a recession. If we're
not so bold in our decision making and policies, we'll suffer through a real depression.
Those who are following the financials will see that the credit market is melting here and aboard. Banks, mortgage providers, and insurance comapnies
are all dependent on positive credit for their success. Trouble is, there are too many of these companies that have made risky or even bad
As the rate of defaults and foreclosures go up, stockholders will sell and these firms will suffer from both ends. As their cash flow dries up, their
companies will fail. There are several reasons why this will hurt more people than the 1929 crash ever did.
The most threatening thing faced by the average American is their credit card debt. As you may have seen over the last few weeks, the U.S. Congress
has been questioning representatives from the credit industry about some of their policies and practices. too many card hodlers arebeing trapped in
to debt that they can't pay, despite all of the good faith in the world.
Every credit card in America today has a provision in the fine print that means the lender can ask to be paid in full...now. A small percentage of
card holders will have tiny balances that they can zero out quickly enough. Others will need to refinance their homes to tap equity that will be used
to pay off the plastic. Everyone else is...toast.
It's not unreasonable to suggest that we could see a cascade effect that would destroy the U.S. economy. The money supply would simply fail because
there wouldn't be any. Smal business closures would spike the unemployment rate. Corporate downsizing could happened faster than you could track
it. These, among many, are the real worries.