Christmas 2010 will be the historical bookend of the consumer era. (Emphasis added: CHS) The last gasp. I don't see any possible chance of its return. This culture of spending, the conditions won't be there for it, nor the desire to consume like that again. I think it's simply being beaten out of us.
But, further to this point, with the tremendous implosion in the FIRE economy and the huge aggregate losses in the GDP from Wall Street, the banking sector and the real estate bubble (all essentially non-productive enterprises seen from hindsight, none likely to rebound for decades), when these losses get combined with a massive, massive slowdown in US consumer spending --which serves as a sort of gigantic furnace for much of world manufacturing and trade, of course-- we'll have an America where the GDP returns to the level of... what year?
Subtract the FIRE industries, throw in the consumer/debt shut down and how much THAT will subtract (I can't guess at that number) we are looking at one hell of a haircut for the GDP. It won't be anything like a 4% contraction-- already an epic nightmare-- it'll be an abrupt implosion of some high percentage of the GDP.
And when America's rapidly growing national debt is measured against a GDP that looks closer to 1996's tally than to 2006's, this is when the word DEFAULT will be on everybody's lips. It will begin to seem advantageous to repudiate the debt before there is no possibility of any sort of governmental spending beyond servicing it. What will that do to the currency, what will this do to world trade, etc.? So many more onion layers keep presenting themselves and it all looks doomed.
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