On Feb 17, 2009, at 12:02 PM, Doug Henwood wrote:
> The collapse of the U.S. consumer:
>
> <http://www.ritholtz.com/blog/2009/02/weakness-unmatched-in-35-years/>
>
Consumer demand for "durable" goods comprises three components:
replacement demand, improvement demand, and new-household demand.
The consumer boom of the past decade means that much less has to be
replaced; the disappearance (to say the least) of expectations for
better income means that much improvement demand has been, can be, and
will be postponed indefinitely; and surging unemployment always means
a decline in new-household formation.
Add in the existence of massive industrial overcapacity and a two-year supply of unsold housing units, and the depression seems fated to be very long indeed. Last quarter's GDP numbers grossly underestimate the current rate of decline, because they count as positive, rather than negative, the slump-induced increase in inventories and decline in imports.
Nothing in Obama's grossly inadequate "stimulus" package will alter any of this. They talk about "jump-starting" the economy, but no jolt, and no amount of gas, will be enough to start a car with a dead motor. The engine needs to be taken out and replaced with a Green unit!
Shane Mage
> This cosmos did none of gods or men make, but it
> always was and is and shall be: an everlasting fire,
> kindling in measures and going out in measures."
>
> Herakleitos of Ephesos