October Blues

For a hundred years or more, the American economy has dominated world markets, spurred unparalleled technological innovation and amassed vast amounts of capital well beyond any other nation in history.

Now, on "Black Monday" where, despite injecting hundreds of billions of dollars into credit markets by governments around the world, the final days of American economic hegemony are being increasingly discussed, not in the dark, quiet corners of conspiracy blogs, but in the national media and in legislative circles.

I'm sure this must be a surreal experience for some to see 1 trillion dollars of taxpayer money being thrown into the world economy only to see it being virtually ignored by the huge sucking sound coming from another almost 700 point drop in the Dow.

In just two days of trading we have been witness to a drop over 1,000 points. And on Tuesday, October 7th the total loss widened to over 1,500 in a continued world-wide decline in which the solvency of Brazil, Iceland and Pakistan have now come into question.

Tell me how we can stop the markets from crashing when our main solution is a huge bloated plan that is only designed to go into effect in a few weeks time at the earliest. At this rate, there might not be too much left for the bailout to save.

Unfortunately, from the time the bill was signed until today, the only other instrument the Fed has discussed is playing around with interest rates.

Obviously, we need more than getting housing prices to stabilize, and "confidence" to solve this epic crisis.

The bubble created by deregulating our housing market may have started this whole mess, but I wouldn't be too sure that our own governments 10 trillion dollar debt, among other things, won't add to these problems.

So it isn't too hard for us to see why lenders aren't feeling very generous lately, especially when average personal debit is over 10,000, not including our bill for financing this latest mega-bailout.

But is the answer just simple confidence? I highly doubt it. Consumers are also being socked with higher property taxes and fees at home, while states like California teeters on the brink of bankruptcy themselves. Fortunately, the price of gas is down for now, but that has also resulted in the devaluation of the Russian stock market by over 30 percent.

What we are really seeing is the spread of the housing debt bubble as it's moved from consumers defaulting, to the banks merging and crashing, and finally, to the solvency of governments themselves.

As prices fluctuate widely, companies, and even countries, will be seen to teeter on top of a precipice. So it's much wider than a domestic issue in which the average price of homes in the US can act as the silver bullet to world-wide stability.

The debit is already in circulation, and the bad bets made on the bad debit are also in circulation, making their rounds, too.

Sadly, our economy is about to go bust and our dominance over the world around us will be drastically reduced. But the issue that faces us now is not being properly addressed, and the people who are about to spend our money to help revive the economy are the very ones who perpetuated this whole mess in the first place.

In the short term, there are no real signs of relief either. Most companies expect a weak holiday shopping season to end out the year, and the only thing we can really look forward to is next spring where hopefully someone will buy a damn house.

Certainly, if the principle credit lines are not restored soon, people may have jobs but they might not be getting paid at all. And as the market continues to tank along with our home value and almost every other measure of our net worth, this just doesn't give us too much to be confident about.