[jwparkerjr]

I remember thinking several years ago the problem was actually one of too much money. As if that could ever be a problem! The old faithful investments that had kept the old money families for generations were suddenly not paying enough to keep these people in manner to which they had become accustomed. As the money level went up, interest rates went down. So they started looking around for other places to put their money. One of the areas that got their attention was credit cards. Credit cards where they could demand, and get, rates that would have been usurious, if not obscene, a generation ago. But the only way to write enough of this stuff to really make money was to market the cards to people who had previously been unable to have a Master Card, Visa, etc. They had been denied bank cards in the past for the simple reason their credit history and/or income were not compatible with the standards the banks had learned from decades of experience were needed to avoid default. For the first time in history it became possible for the average person to load up on credit cards and run up $30,000 or more in balances in a very short period. All was fine for a while, especially for the people who made and sold all the neat things that were suddenly within the reach of all those credit card holders. But then reality set in and the trouble started. They could no longer make the payments, either because no one had limited the debt they were taking on, or they lost their job and the defaults started. Add to that the loads that were being taken on by home buyers, then the collapse of the home market and you have what we have now.

I know it’s a whole lot more complicated than this, and there’s a whole lot more to it than just this part. IMHO, we simply started spending money we didn’t have and couldn’t hope to repay.

[bronxboy]

Again...you are talking about individuals...the whole point of the argument is that individuals did not cause this...you think the traders in London were issuing bad credit cards? I think not...blame those who did it...not the average American.

[grey_whiskers]

Yes, and now the powers that be are trying to keep manufacturing capacity, and prices, from resetting to the level actually justified by the incomes.

Interestingly enough, there will be a double whammy here, because the incomes have been artificially suppressed by offshoring of jobs, and by high taxes.

So we're going to see manufacturing drop to even lower than baseline, and (hopefully) prices as well.

Cheers!