Economic Downturn Will Take Years to Unravel: Wolf

I personally have no desire to increase my spending, I, like many (thanks to being laid off), have figured out it is not "stuff" that matters. I had my stuff, now I don't. I found out that life without it is much less stressful, and much more rewarding. My bicycle works fine to get me to work, a used car is as dependable as a new one, less costs for insurance, a smaller home (-60%) means a much lower income (and lower taxes!) is required to live well. As a bonus, a lot fewer working hours means I spend more time with my loved ones. My TRUE American dream has finally been realized. Hopefully for all those gadget makers, the rest of the world will start chasing the over-rated materialistic "American Dream", if not, we are in for a real ugly and long downturn.

For the people buried in debt the deflation is really going to hurt. Falling asset values and wages will make it harder to pay back those loans with inflated values. That's why it will take years, the defaults won't come all at once.

This could be turn around sooner. 500 billion per year spent on imported oil. The U.S.A. has 100 yrs of natural gas. Nat gas infrastructure pipeline, power plant, tranportantion. JOBS, JOBS, JOBS. It's the economy stupid.

Almost 2 1/2 years ago Mohamed El-Erian of PIMCO stated : we have a "new normal".
1-2% growth, high unemployment, not the debt fueled 3-4% growth of the past 25 years.
The new normal is 100% correct and it will not change in this decade.
Washington theatrics do not change the above facts.

Presidents & Congress......Democrats and Republicans alike, have let us down. For years, they have individually served their "party" first, their financial supporters second, and Americans last. They got us into this mess, but lack the intelligence to get us out of it by continuing the same old line......serve the party, and my contributors!
They all need to be "recalled", and replaced with people who know how to budget!

Mr. Wolf is absolutely correct on all fronts. The consumer is not going to resume spending until the massive housing debacle clears out. We are about half way through OUR lost decade. It is going to take another 5 years for the excess housing inventory to be sold off. There is nothing that can be done except let time do its job.

People like to trash the stimulus spending as a waste because it didn’t usher in prosperity. As Mr. Wolf states, all the stimulus did was prevent a depression and he is correct. Most people to this day do not understand the scope and depth of the financial crisis of 2008. It was an unbelievable calamity. Its much easier to just blame someone else. There are no solutions, no magic bullet, no matter what the politicians and pundits say. WE did this to ourselves and WE have to tough out the next 5 years with pitifully slow growth. Yes, the tax system is screwed up and should be completely replaced but the special interests will never let that happen. It will just be tweaked a little this way or that. My position is that unless we completely reorganize taxation and spending on all major areas, things wont get any better for a long time. There is no political party or platform out there that wants to do what needs to be done. Smaller government-lower taxes is not a solution, it’s a slogan. WE need solutions and the first step in that direction is realizing that all of us belong to the same WE.

Until we put a floor in housing, nothing else matters. We must let the free market put in the floor.

What happened to the 2nd half recovery that Bernanke and all the other fools talked about?

A slowdown from the boom decades of the last century was inevitable as nations around the world developed their manufacturing capability and took jobs away from the US. We allowed our leaders to make that trend worse by policies that drove jobs overseas. What got us in trouble is failing to adjust our appetites to the new reality, and by failing to make US job retention the first priority above all else. Then we leveraged the disaster by attempting to maintain our old standard of living with debt, both personal and government. We did this to ourselves.

By the time we get around to deleveraging in several years, gasoline will be over $6 a gallon and we will have that as the constraint on our system. That and the fact that our country's population will have grown by several million more people with no increase in the number of employed.

until people be quiet and stop adding input and talking so much and actually step up and do something then yes we are in recession, citizens u r grown men and women act like it stop depending on the government the gov.is not ur father you are not babies, give up a few things add to the process stop being greedy and help out im tired of talking,shut up and do something,if japan could rebuild 3 times in a row wh cant we do it twice

Years? More like decades. The social policies that misled people into believing in the everything for nothing concept is still alive and well. Now it's just a different cast of characters holding out the eternal/infernal false promise all over again as nation after nation goes deeper and deeper into debt. It may be heresy for a red blooded American to say it but we have to admire the leaders of China who have shown that they are better at managing an economy of 1.3 billion people while a bunch of corrupt western politicians killed off a capitalistic system that had produced fifty years of prosperity for millions of citizens.

Recessions/Depressions resulting from Debt Bubbles can take many years to recover from.
As mentioned by Mr. Wolf, part of the recovery process requires DEBT DESTRUCTION in order to lower leverage across the economy. Unfortunately the US Government and the FED are doing all they can to avoid this and following the same playbook as Japan in the 1990's until know. As a result the US is "going Japanese" and could easily be in for another lost decade or two! My recommendation: Tell your kids to move to Asia, that's the only place with a real future!

You misunderstand the reference to "everything for nothing." It's the concept promoted by Democrats and Republican alike that society owes you a fully furnished nice new home along with two cars so you can keep up with the neighbors who are up to their kisters in unredeemable debt. Absolutely, I'm with you...I want what I have paid into for an entire working career, and for the federal government to stop suffocating me with the know-it-all product of burearcrats.

We're headed for stagflation, a la 1978, for several years.

take years? how about "never"? Socialism equals misery for all. As long as people "vote for a living" instead of "work for a living" (a great quote by HL Menchen), recovery cannot happen.

It all comes back to housing. The various government mortgage programs have largely failed. They are targeting the wrong people. There are countless people on the sidelines of the housing market due to being significantly underwater. I am talking about the 30-somethings that were first time home-buyers in the mid 2000's. This is the demographic that is in its prime earning years and that can make a difference by pouring money into the economy. Instead of doing so, however, they are stuck either strategically defaulting on their home, or paying down principal hoping to someday be above water and selling the darn thing.

My solution to this is a government subsidized short sale program. This would only be available to those with excellent credit, with no delinquencies, etc. No debt would be forgiven, but qualified homeowners could sell their home at a loss, with the underwater amount being converted into debt payable to the government. This would allow banks to get their money, allow first time homeowners to get into affordable homes that are not in disrepair, and allow those stuck in their existing homes to get into better situations.

how are we suppsed to believe these morons when they cant even SPELL "recession" correctly in their videos..... idiots

We never really recovered from 2008. To make matters worse, the current administration is following policies that seem deliberately aimed at an academic utopia but are a disaster for the economy. Consider the administration's advocacy of solar and wind power and hostility to natural gas. Incredibly and ironically, the enviros who elected this guy are now fighting solar and wind in the name of the environment! They have a DEATH WISH !!

We need to drill for our own oil....then watch the price drop by > 50%. Can you imagine what would happen to our countries economy if gas was $1.50 a gallon!!!!