One year after the near collapse of the global financial system, this much is clear: The financial world as we knew it is over, and something new is rising from its ashes. Historians will look to September 2008 as a watershed for the U.S. economy.
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One year later, the easy-money system that financed the boom era from the 1980s until a year ago is smashed. Once-ravenous U.S. consumers are saving money and paying down debt. Banks are building reserves and hoarding cash. And governments are fashioning a new global financial order.Congress and the Obama administration have lost faith in self-regulated markets. Together, they’re writing the most sweeping new regulations over finance since the Great Depression. And in this ever-more-connected global economy, Washington is working with its partners through the G-20 group of nations to develop worldwide rules to govern finance.
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For much of the past two decades, strong U.S. growth has come largely through expanding credit. The global economy fed off this trend.
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If U.S. consumers no longer drive the global economy, then consumers in big emerging economies such as China and Brazil will have to take up some of the slack. Trade among nations will take on greater importance.
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“The basis of revival of the system along the line of what previously existed doesn’t exist. The foundation that was supposed to be there for the revival (of the economy) . . . got washed away,” Galbraith said.
“Congress and the Obama administration have lost faith in self-regulated markets.”
“self-regulated markets”?
The U.S.A. operates on fascist and mercantilist systems. “Self-regulated markets” haven’t really existed in in their country for a while.
lol, ignorance.
I’m sure such articles have never been written before…
Bummer. I could use one more bubble till retirement.
Someone suggested the baby boomers, because the meltdown happened so close to their retirement, won’t spend us out of this recession…therefore the comeback will not be as in the past…
That seems plausible.
Whether its true or not, we shall see.
The problem with tightening things like loans is the only way the economy grew was giving people loans that they could not really afford unless all the planets were aligned. Of course they became un aligned for many and here is the problem. Now the Obama administration almost seems to me that it could go back to that. Because stimulating the economy is going to require it. Debt is a real problem for all of us including and especially our federal government. But a continuing cycle of debt will only repeat a recession and possible a depression on a similar cycle. Even as income was stagnant spending was increasing. That’s a doomsday scenario to be sure.
Spending was never the problem. Producing on the other hand …
Why save in the US? Interest rates are ridiculously low. You can write off interest on your mortgages and borrow with zero down with no penalties or insurance. Pension plans are under regulated and mismanaged (or worse). Insurance companies (medical and other) will clean you out if you have money in the bank before they pay out.
Systemic changes are needed or an underground economy will emerge.
#15 Alfie – I hope you’re really, really thirsty! You’d better get drinking then as that’s a lot of water you’re going to have to get rid of to be able to get to all those hidden, precious resources. Or is your invisible blue-eyed Jeebus going to magically appear and miracle it away for you? And if you manage all that does it mean that it all automatically belongs to the U.S.? Drink baby, drink. Have a good time with that.
Conservatives regain power? You already had your chance with that. Look what it got ya.
“Will it go round in a circle,
Will it fly high like a bird up in the sky …”
Its all cyclical.
“Boom Bubble Bust, Boom Bubble Bust, Never let it rust, Boom Bubble Bust, Boom Bubble Bust, waiting for the cusp, Boom Bubble Bust, Boom Bubble Bust …”
“Don’t worry, Be happy”
Consumerism, that’s where the economic health of the nation depends on people ‘buying’ into the idea that wealth represents success. The fallacy that he who posseses more is more secure, happier, and more successful. The perversion that it’s better to compete than to cooperate. Life is a question of values, how you live and the decisions you make effect how you see the world and yourself and ultimately determine your destiny. As true for the individual as it is for society. Time to grow up. This might be a good thing.
amodedoma;
What! And give up my big screen TV! Just to be happy!!
What would Oprah have to say!
In four words yes.
#30 amodedoma
True wisdom.
Oh yeah, our service economy will take off and provide jobs for zillions.
For every manufacturing job lost, a hundred more service jobs are created. As people move into service jobs, average wages will go down and down and more service jobs will be created. When wages approach zero, or you even have to pay to work, service jobs will explode. This is that virtuous self reinforcing cycle economist, Republican, business people have been promising.
We don’t need no stinking manufacturing base.
Funny how they blame Obama for literally everything and yet these people seem to have a blank memory of the eight years of complete stupidity done by the Bush Jr. Administration.
Ahhh the good old days when our biggest national security issue was presidential blow jobs in the Oval office.
#35 Yeap, Dumbya did it. But the current guy in charge, who should supposedly fix the thing, is just making it worse. Among other things, doing the same things Dumbya did!
We No Longer Have A Consumer Economy — Will It Ever Come Back?
a better title might be:
We No Longer Have A Middle Class – Will it Ever Come Back?
ALL economies are consumerist.
Its HOW FAR you wish to take it,
Its how far you wish to ABUSE IT..
Look at Detroit.
When the auto industry started it was a great place and the property values DECENT..
They made money and COSTS went up, BECAUSE THEY HAD MORE. THAT isnt FAIR. They could DO it cheaper, BUT THINGS HAPPENED, and prices went up. FOR no reason.
if THE gov. MAKES MORE MONEY, they think they can AFFORD to spend more. the SAME with companies. They STOP doing it the OLD way, and decide to spend money ANOTHER way that costs more.
ONCE it costs MORE, they raise prices to COVER, and we end up spending MORE..
Its a BAD trick, of those that WANT alittle more, get it from the consumer, SPEND more, insted of solving the PROBLEM, and then raising prices again.
ITS ALSO stupid to leave your MAIN office in a city charging you TONS of money, when you could MOVE and BUILD a new building in NEBRASKA for 1/2 as much. And keep costs down for YOUR EMPLOYEES, YOURSELF, and the customer.
AND guess what happens..THE other business will move with you. THEY will follow you. Including movies, theater, and so forth…AS you TOOK your money OUT and put it WHERE it can help.
Its the OLD way, when the STORES went to the customer, and were SPREAD OUT..insted of AT THE MALL 20+ miles away.
The statements like “near collapse of the world’s financial systems” is so misleading. Had they collapsed, the world wouldn’t have ended, just AIG’s world, and some others. Instead, the oldest tricks in the book were played, just as the election came near, and the rich played the game as they know it well, scare everyone with doomsday scenarios, they play cards, and win. And what’s the “the world we knew is over” crap? Helloo?