How bad is the US Economic Crisis?

Previous Fed Chairman Greenspan says it's the worst he has ever seen.

It's not a crisis. It's a market correction....

Previous recessions in 1990, 1998, and 2001 had one thing that this recession will not have: The ability to lower interest rates to generate growth through cheaper dollars. We cannot go much lower. Since we don't have any slush funds to place IOU's in (Social Security, Prescription Benefits, etc.), the only other way to pay off the massive debt is to raise taxes.

Not only will Americans' have higher taxes in the future but will also be fighting a 10-15% increase in inflation for the next couple of years. We live in volatile times.

Inflation would seem to be a given with the gov't throwing money at every leaky hole, but with the market, economy, and housing all contracting rapidly (and continuing for years to come), deflation might be the winner. The low interest rates have painted the country into a corner...

no, the people in 1860-1865 lived in volatile times, so did the people in 1929.

That said, we live in uncertain times. Shit could go bad in a hurry...

I think it is bad but not fatal. Fear drives cycles as much as greed. However, this fears seems to be focused on some core parts of our system. I often refer to this as Infrastructure Cracks. There is only so much money and we have some major problems (credit crunch, social security, health care, national debt, etc.). Our entire economic system evolves around the concept of Fiat money. Hopefully the fear will not reach a level where that concept falls apart. If so we are really looking at a big mess.

My personal opinion is that we are headed to an ugly global recession and a long period of recovery (maybe years). I hope we don't get into a global deflationary spiral but I think that is a real possibility. I am not sure where it all ends but if the mass fears doesn't get under control, at some point the consequences could be catestrophic. I think we might be going through a major shift in the way our society conducts business and financial affairs. If so, there will be a positive end but a lot of suffering in the process.

Gusto,

I think the problem is just not available credit. I think the way credit will be given out in the future will drastically reduce the credit that will hit consumers. The days of crazy loans are over. Lending will not dry up. Instead it will be done with people who present very little risk. I am not sure how to calculate the amount of consumption that comes from too much stupid debt. However, I am sure when this kind of lending changes back to fiscal responsible lending it will lead to a major slowdown in global consumption. It is that shift that makes me think we are headed toward a global recession.

Just think about the "malls" that were built to absorb all the easy money families spend from the value of their homes. I see all the LOWES, HOME DEPOTS, and others that need those dollars, ALL of them, or trim expectations.

"Just think about the "malls" that were built to absorb all the easy money families spend from the value of their homes. I see all the LOWES, HOME DEPOTS, and others that need those dollars, ALL of them, or trim expectations."

We've got something like 9x the retail space of Europe. We have more income, but not 9x more.