Friday, February 20, 2009

When Will it all End?

It will all end when we've reduced our debt loads to the point where we can spend money again and not have to use all of our discretionary income to pay off loans. It's really pretty simple. Anything that moves us in that direction will shorten this recession / depression, anything that adds debt will make it longer.

Mish has long been talking about an "L" shaped depression - one where the market and economic activity falls and then stays at the low level for a long time. The "L" shape is the steep drop and then the long period of drifting at the bottom. I was just reading an article in Money Week about their predictions for Britain when this thought hit me.

The situation really isn't that complicated. Think of any time in your life when you've been poor or loaded with debt. Now imagine the majority of the country in that condition. It's not about the government stimulating demand or Keynesian multipliers or banks issuing credit, it's all about getting back to the point where you can consider buying a jetski again.

2 comments:

TheBigHenry said...

I like it.

Anonymous said...

Jetski?

What about a hamsterski?

New Scientist published this video, apparently with a straight face.

Picoamperes. Indeed.