If you want to know what the big driver in the upcoming recession will be, start here, and then read the follow-up. Summary: During the next 20 months, over $2 trillion of adjustable-rate mortgage debt will be up for interest rate resets. And those rates will go up. Consumer discretionary spending will be cut by about a trillion dollars over two years. That will have a significant impact on our entire economic milieu.
And I bet you thought we were out of the recession, getting ready for a growth spurt! Nope, we’ve had the growth spurt, and you probably missed it – you had to be a corrupt lobbyist or defense contractor to have made any real dough in the last few years.
The only good thing is the timing. This will have started by the time of the mid-term elections this November, and will have hit big-time by the next presidential cycle. The special sauce is that we spend $10 billion a day on military spending, which is totally unsustainable. So hopefully the fat-cat “tax cuts drive growth we need to protect America” militarist crowd will be thrown out on their bums and we can start to rebuild our democracy.
And I agree with these two guys on the state of play, in that regard.
March 16, 2006