As we have said now for years, the problem is extreme debt ... Bush and Obama have only made the bursting of the debt bubble worse by trying to use more debt to re-inflate the bubble.
This crisis is a long way from being over, and when it is over, we will be living in a very different world.
'We're in the Middle of a Crash': Black Swan | CNBC
The financial system is crashing and action must be taken by the US government to convert debt into equity to produce a more stable environment, Nassim Taleb, author of "The Black Swan," told CNBC Thursday. "You may have green shoots, whatever you want to call them, you may have temporary relief, but you are still in a world that's breaking," Taleb said on "Squawk Box."Anything that's fragile like the financial system will eventually crash, he said.
"We're in the middle of a crash," Taleb said. "So if I'm going to forecast something, it is that it's going to get worse, not better."
The government needs to deleverage debt and not try stimulus packages that will inflate assets, he said.
"What makes me very pessimistic in not seeing any leadership or awareness on parts of government on what has to be done, which is deleverage $40-to-$70 trillion," Taleb said.
"The monkey on our back is debt," he added.
As an example, Taleb said banks should not be sending demands for larger and larger sums from homeowner in arrears on their mortgage. Instead the bank should offer to lower the monthly payments in return for part-ownership of the property.
"People would be able to start from scratch on a healthy basis. You don't want to wait for foreclosure," he said.
© 2009 CNBC, Inc.
Here is a link to an article that lays out some important ideas for mitigating the effects of the exploded debt bubble. Tough choices have to be made, choices that Obama and the Dimocrats are incapable of making ... but the course is rather clear: we must bring real, sustainable production and localized economies back to the United States.
Our Jobless Recovery | Leo Hindery Jr. & Leo W. Gerard/The Nation
... The current jobs crisis is in part a reflection of the misplaced priorities of previous administrations, which let America's manufacturing sector decline vis-a-vis our services economy. As a result, manufacturing industries now represent just 11.5 percent of GDP; the number of people working in manufacturing accounts for only 8.7 percent of the jobs in the country; and we have run an average trade deficit in manufactured goods of more than $500 billion over the past five years, all of which contributed to the huge buildup of US debt in recent years.This almost complete neglect of our manufacturing base relative to our service sector represents the height of irresponsibility, because compared with those in manufacturing, service jobs pay below median wages, do very little to help America's balance of trade, have a much smaller multiplier effect on other parts of the economy and mostly just move incomes around the country.
Regrettably, however, some in the Obama administration have extended this neglect by essentially taking the position that a job is a job, whether it is in the manufacturing or service sector. ...
... The administration and Congress need to replace our decades of misguided trade policies with trade agreements that have meaningful labor and environmental standards and that forbid illegal subsidies and currency manipulation. They also need to dispense with "one size fits all" trade agreements that ignore significant differences in levels of development, forms of government and reciprocity. Specifically, there can be no compromise on these principles when it comes to the pending trade deals with South Korea, Panama and Colombia.
Most important, however, we need a fundamental re-examination of our trade relationship with China, which the new administration promised would occur early in this term. ...
... Half of the nation's individual income today is earned by just the top 12 percent of taxpayers, many of whom have benefited directly or indirectly from the outsourcing of US manufacturing and service jobs, while the other half is earned by all the other 122 million taxpayers combined, most of whom have seen their wages stagnate over the past two decades. And even more sobering, the top seven-tenths of 1 percent of taxpayers alone earn a staggering 20 percent of the nation's income. All in all, this represents the greatest income inequality in the United States since 1928.
We can either focus our recovery efforts on creating full employment for those workers who are not part of that top 10 percent or so of taxpayers and on rebuilding the country's manufacturing base; or, as we have been doing for nearly three decades, we can concentrate on policies that mostly benefit the incomes of the wealthiest few.
Economically--and ethically--the choice is obvious.
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