"We economists were wrong. The events of the past 10 years have an eerie similarity t the period leading up to the Great Depression...In 1920 residential mortgage debt was 10.2 per cent of household wealth; by 1929 it was 27.2 per cent of household wealth. It appears that both the Great Depression and the current crisis had their origins in excessive consumer debt --especially mortgage debt--that transmitted into the financial sector during a sharp downturn...It appears that we're witnessing the second great consumer debt crash, the end of a massive consumption binge."
Admitting that economists make mistakes is a good first step. The next step would be to stop blaming consumers for over spending when the entire advertising machine was created to goad people into purchasing what they don't need. So what needs to happen now is that economic gurus and media pundits should stop pretending that Wall Street isn't in better shape than Main Street. By the end of summer the TSX will be up past 11,000. What will be destroyed are the lives of "ordinary people." Rescue packages have kicked in for the banks, but the devaluation of private real estate coupled with huge job losses means that hundreds of thousands of families will never recover-- not from lost income and lost savings that were cashed in when" little " investors lost their nerve. Pensioners from the automative industry will end up working at Tim Hortons in order to say afloat.
As Noble Prize Laureate in Economics, Professor Vernon L. Smith says: "We've had a real estate bubble, a technology bubble, then another real estate bubble to deal with, in just the past 20 years." I don't know about you, but all my so- called retirement and investment plans that high priced financial planners have sold me, are out the window. So much for Freedom 55.
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hi,
ReplyDeleteare you suggesting that the consumers are not to blame for over spending because the advertisers were forcing them to buy products. do you believe in free will, or do you believe that we cannot be held responsible for anything? because if we have the ability to choose even one thing in our life it means that there is free will and we can be held responsible for our decisions.
I'm suggesting that the mismanagement and greed of Wall Street coupled with the most sophisticated advertising machine ever invented to tantalize consumers into reckless buying, hurt the little guy more than the players. The players will be okay, but what happens to the guy in Windsor or Oshawa with three kids, a mortgage, and no hope of a decent pension?
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