Is This The Perfect Storm?

My father was a little boy during the Great Depression. He said his family did okay because they lived conservatively and worked hard. My grandfather was a roofer and my grandmother made candies. They had a two-family house and rented the upstairs. Their furniture was utilitarian. They grew their own vegetables and, sometimes, meat. They got through it.

Now, America is in another economic catastrophe caused by it's own making. While it was speculation in stocks in 1929, now it's derivative speculation and sub-prime loans. But, people in stocks are seeing their savings fade away. Eerily similar...

While the other countries of the world are calmly observing, or maybe laughing to themselves, this will affect them, too. America is firmly rooted in almost every country in the world. Whether it's the exports from China, the customer service in India, or simply support for small nations like Georgia, it will all go out the window.

At this point, I don't see a way out of this. Something bad is coming. The house of cards is much bigger than it was in 1929. $700 billion is just a drop in the bucket and helps only a small number of banks. As I write, lending has essentially stopped; the grease that keeps our economy running. The dollar is dropping. Housing prices are dropping. All of our assets are being de-valued.

While Congress wants us to approve of a staggering $700 billion bill due to the sub-prime/derivative market fiasco, Americans are hunkering down. They are not spending and neither are the companies they work for. As this situation gets worse and companies cannot get money for their line of credit accounts, they won't be able to pay their creditors, and finally, they won't be able to pay their employees. This may take three months or more, but it will happen if banks do not begin to lend again. At the least, the lending rate will be elevated and the higher rate will be paid for on the backs of the consumer.

Next, we have the energy crisis. Our Democrats do not believe we should drill for oil. The result: higher gas prices. It's begun again. Due to Ike, we have gas shortages down South. Our reserves are down. Our oil refineries are temporarily closed. Every aspect of our economy will be affected by the gas shortage. People will struggle to make ends meet as we again see prices go through the roof.

I am angry because this economic fiasco was created in Congress. They are not qualified to make complex decisions. They are politicians, not economists. This morning, watching C-Span, I saw a Senator ask a Fannie Mae expert what made up Fannie Mae's assets. That said it all. Duh! Um, mortgages, Senator? There you have it.