The core issue of the Economy right now…

I was reading an article in The Motley Fool regarding the Economy and an economist’s view on the various plans that the government was implementing to help different areas. He made an interesting point, that anything done at this point that doesn’t directly relate to the core issue, won’t help the economy. He said the core issue is that “There’s just too much leverage (remember that is debt) within the economy, the financial system, consumers, and the nation’s balance sheet. Anything that basically doesn’t address that issue in my mind is treating the symptom, rather than the disease itself….”

He went on to say it is not going to change overnight, it will take 3-5-10 years to “clean up” what has happened in perhaps the last 25 years of a consumption society. What else he did say that I would say is contradicting himself was that we would be starting to climb out of the recession in Q4 of this year. I thought this was interesting, he says that recessions are cyclical (short-term) and our core problem is secular (long-term). He said that the two just so happened to collide at the same time, and that there is a difference between the recession and the economy as a whole.

So we are living through one of those transition phases of our society. It will be one for the history books, but look on the bright side, we as a society always get through them, all be it sometimes painfully, but we manage.

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~ by debt2dreams on February 28, 2009.

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