Per Bloomberg.com, Paul Volcker has said what this blog has been saying since inception, which is that Americans overconsume relative to their real earnings (and the obvious mechanism to allow the overconsumption is easy credit, thus the long-overdue tightening of lending standards):
Former Federal Reserve Chairman Paul Volcker said imbalances in the structure of the U.S. economy pose a bigger challenge than the financial crisis and will impede economic growth for some time.
“We have another economic problem which is mixed up in this of too much consumption, too much spending relative to our capacity to invest and to export,” Volcker, an adviser to President Barack Obama, said today in Berlin. “It’s involved with the financial crisis but in a way it’s more difficult than the financial crisis because it reflects the basic structure of the economy.” . . .
“It’s likely that economic growth is going to be pretty sluggish for a while,” Volcker said in a Bloomberg Television interview.
Given the enormity of the falloff in the economy post-Lehman's collapse, the percent growth rates are going to look fine. However, even ECRI is predicting much shorter growth-recession cycles than we were used to in the 1983-2007 time frame, and it has been as bullish as any organization for the past about 10 months.
The sooner the U. S. government speaks truth to borrowers, as well as sets an example by restraining its own borrowing and spending, the sooner the economy can get back on a healthy long-term track.
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