Inflation-adjusted consumption since early 2008 has been the weakest since post-WW II. It's the "Japan disease," causing two lost decades with no end of their troubles in sight. Instead of solving their problems, they postponed inevitable failure by extending credit to "a broad cross-section of insolvent companies," America's policy today to zombie banks, delaying their day of reckoning.
In post-bubble America, "a record buying binge lasted a dozen years, US consumers stretched as never before (on) the precarious foundation of two bubbles - property and credit - which have now burst."
It will take years to undo the damage. Deleveraging to pay down debt has barely begun. While "below the peak (2007 130%) peak ratio," it's "well above the 75 per cent average of the 1970 to 2000 period."
The saving side is just as imbalanced. Up from "the rock-bottom 1.2 per cent in mid-2005," it's way short of the nearly 8% norm common in the previous 30 years. It'll take years to get back there, and consumption will languish until then.
At the same time, Bush and Obama administration policies condone "reckless behavior," making a bad situation worse. In contrast, consumers are spending less, deleveraging and saving, especially "77m aging baby boomers" more on their own than ever to get by as they approach retirement.
As a result, expect hard times for years to come, exacerbated by politicians and central bankers wrecking economies further, propping up too-big-to-fail banks. In fact, they should be shut down or nationalized instead of prioritizing their needs above others. It's a fool's game, assuring greater trouble, perhaps violence, even rebellion when angry millions decide not to take any more and fight back.
Stephen Lendman lives in Chicago and can be reached at Email address removed.
Also visit his blog site at sjlendman.blogspot.com and listen to cutting-edge discussions with distinguished guests on the Progressive Radio News Hour on the Progressive Radio Network Thursdays at 10AM US Central time and Saturdays and Sundays at noon. All programs are archived for easy listening.