Recession or Depression?

By any name the economy is on a slide down a slippery slope, with no brakes on the sled. Underlying the descent is FEAR, but that fear is rational and justified. Ours has evolved into a consumption economy based on easy credit. To sustain such an economy we must have high employment, high wages and ever increasing but controlled inflation in asset values. In the last decade government policy has undermined all three of those requirements.
The outsourcing of our industrial production, encouraged by the administration under the assumption that lower production costs increase volume, eroded the blue collar
segment of our population. This drove down the bargaining power of labor, leading to higher unemployment and lower wages.
Promoting easy credit for consumption led to a massive accumulation of debt and the almost complete disappearance of savings. Speculation in real estate and a mortgage industry that completely abandoned good risk management in exchange for quick and easy profits, laid the groundwork for the collapse of the over-inflated housing market. This eroded the asset base of the financial institutions and resulted in the drying up of credit.
To turn all this around will require time, which we don't have during our free fall. The new administration will need to be bold; to take huge risks, and to do
things which would be imprudent in other times. And they must be quick! That may be the rub. The Republicans in the Senate will resist the amount of spending required, under the guise of deficit control, and in the hope of discrediting the new administration. It will be our responsibility, the middle class of voters, to hold their feet to the fire and force them to act for the public good.