What if there are more bubbles to burst in the US economy? Stephen Roach of Morgan Stanley suggests that housing and consumer-spending bubbles might exist and that bubbles have a tendency to burst. Deflation is a rather chilling scenario to consider and a war combined with tax breaks for the wealthy may not be the best ways to fight it,
A return to the US of the thirties or the Japan of the nineties is not something many would appreciate.
http://www.nytimes.com/2002/09/22/opinion/22ROAC.html
The owner of a local car dealership noted that unsustainable promotions are the only reason cars have been selling well for the past year. He notes that the last few weeks have seen a drop in showroom traffic and a larger drop in sales. This may well be an artifact of his location (white collar unemployment is increasing in this part of New Jersey) or it may be an aberration.
One wonders what happens to consumer sales if we have greater unemployment, a 6000 DOW, a spike in gas prices, a terrorist act or a war that doesn't go like clockwork... Is a two party legislative/executive best to handle it or does one require something more dictatorial like a single party "solution"? What are the consequences of a single party solution on an economy in flux?
One hopes that these are only theoretical questions.
8:08:34 AM
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