Think what it was like for citizens at the end of WWII. At that time the national debt had risen to 120% of GDP. Yet that deficit spending was what won the war and pulled the U.S. out of the Depression. It had to be done; there was no other choice if the U.S. was to survive.
For some background on this go to:
http://www.optimist123.com/optimist/2005/01/national_debt_b.html

Today the national debt is at about 60% of GDP and the deficit spending we need to do to avoid another depression may take us back toward 100% of GDP. Bad? Yes! Unmanageable? No!!

If we take another depression it will set this country back by 50 years economically and may put us in the position of a secondary nation for good. Then there will be some real misery in this country. So, IMO, the present deficit spending is necessary. The big challenge will be to know when to slow the spending.

Debt can be reduced in two ways. Reduced government spending on non-essentials and through greater economic growth. Fortunately, the two are not mutually exclusive. With the right policies this country can recover and become wealthier than ever. Unfortunately, much of that depends on who is in power in Washington. If we could get rid of a majority the big spenders in Congress and enact pro-growth legislation this country could easily recover from this present deficit spending as it did after WWII. That is why paying attention to candidate’s policies and ideas is important. We will reap what we sow. If we keep electing big spenders to Congress we may eventually have too much debt to conquer as a result of profligate government and anti-growth policies.

Admittedly, I am becoming a little selfish. I am now deep in debt for the future, and it includes my children and grand children and others not even born yet, with the unsettling fact that these bills are going to be paid through confiscatory taxation. You seem to understand the situation, and seem to want to pat people on the head who just don’t know macroeconomics, etc. No, I am not an economics genius. But I am getting screwed – big time. I know that much.

Dodd thinks the head of G.M. needs to go. Dodd?

By the way, are you cb’s boss? Sounds like he’s bucking for a raise.

As my financial person significant other said to me last night….

the 3 year arm’s were realizing their higher ‘rate’ and people couldn’t afford the new rate in 2006. The 7 year arm’s and 10 year’s are still coming down.

The damage that this kind of teaser rate loans have done is tremendous.

I didn’t buy one.

I shouldn’t have to pay.

I refinanced in May 2004 to a fixed 6.000% rate. (Yes it’s exactly 6.000%).

Even though values have dropped 35% in Sacramento, CA my home is worth more than 40% more than I owe on it.

It is ridiculous that I have to subsidize people who bought into more home than they can afford (4,000 sq ft) when I have a meager home of 2,000 square feet.

This country needs to stop bailing out bad decisions. Bad decisions should realize consequences and then those entities would never make those bad decisions again. Unless really stupid.

I agree that the government needs to change its ways, that the American consumer needs to be more thoughtful and responsible, corporate governance needs to be reformed, and many other things. It has never been a perfect system and it will never be a perfect system. It is just a system that, so far, has provided more prosperity to more people than any other system.

Schiff was just one of the people who were talking about the housing bust and possible sub-prime mortgage problems. Gary Shilling, and Joe Battapaglia were both in that camp as well. That it has been as bad as it has is due, IMO, to the rapid dessemination of financial rumors in the MSM and on line. Fear spreads very fast these days. And it is not limited to our markets. When Wall Street coughs, all the world markets notice and come down with a fever.

For a more reasoned voice on the markets I would suggest Roger Nussbaum’s blog at:
http://randomroger.blogspot.com/
He is a voice of reason when many people are running around as if their hair was on fire. He is not always right and admits it, but he tries to keep a sense of perspective.

Be forewarned: it’s not encouraging;. Let them fail, says Schiff. The government needs to stop bailing companies out, and no artificial economic stimulus will help. Americans need to start saving more and producing more:

I saw a few clips of him on Cavuto and Fox News. They did laugh at him and painted him an outcast, as fake liberals would do to a real humanitarian. That takes moral courage to keep saying that, in public and in the presence of your peers, while sticking to your guns. That is admirable and should be respected.

As for Schiff being a broken clock, I think there’s some worth in that assessment but it would’t necessarily invalidate his predictions, not if they were based upon specifics and not Oracle of Delphi ambiguity.

Schiff, because he is pessimistic, would obviously pay closer attention to troubling trends and details. That insight and focus should not be ignored, but it should also be considered in light of Schiff’s bias and reliability. This means that you should pay attention to him when he says problems are going to develop. Ask him specifically what those problems are and then double check the results on your own. If Schiff said housing had problems, check the housing laws, regulations, and selling/buying data. The graphs for the increase in house values over the years would be one example.

From the data I’ve heard (not personally examined, btw), Fannie Mae really started kicking off with these sub-prime mortgages after 2002. Usually there is an adaptation time for banks and companies when new laws are passed. When the banks adapted to the new law requiring them to give loans to sub-prime loanees, it took a little bit more time for companies like Fannie Mae to understand how to get more cash out of this new situation. So when Ben Stein said the housing problem with sub-prime mortages was not “currently a problem” in 2004-5, he may very well have been right. It was not a serious problem… then.

Schiff is valuable as one of those canaries in a mine thing. He detects whiffs and often it is better to double and triple check then to assume things are safe and suffocate. Actually, that’s almost certain.

As for Schiff’s views on bankrupting companies like GM instead of bailing them out, I tend to agree. If McCain was in charge, I may not have agreed so readily but with Obama, I tend to think radical surgery and shock therapy is more critical now than sustainment of the status quo (There’s Change for ya, Neo).

GM would learn something from the bankruptcy, get new management, throw the bums out, and so forth. As I have learned after 9/11, with enough pain anything is possible: for it is only then that people start getting the will to get things done.

If there was a chance for the Unions and the companies to work out a deal to make US companies competitive and not Big Business + Big Government monopolies, then I wouldn’t be for radical changes like bankruptcy. But it is unlikely, under Obama, that such things would have happened. It would have been unlikely under McCain, as well, but at least he would have had Sarah and his wife to tell him what to do.

Given that it only took a few seconds to read your post, I thank you for not wasting any more of my time than was required.