This seems to be the big correction people seem to believe is long overdue, where our years of forgetting how to save for tomorrow and live within our means both on the government and individual level as well as our giving away the farm to countries like China and India in addition to future industries being mired in religious and political dogma painting a not so rosy picture for the future.

How does anyone fix this?

Seems like alot of belt tightening all over. A complete paradigm shift if you will, in regulation of economics down to how we approuch urban planning. It would take decades if we can hold out that long. Europe and Asia already have this all figured out. The thing is can we abandon our reckless abandon, since our economy is pretty much based on doing each others laundry?

If we find a way to keep our clothes cleaner and do less laundry loads, do we in fact give away the shirt off our backs? Wealth is indeed going to get redistributed. It all depends on how painful we as a country want it to be.

Thoughts?

Honestly, if all of the variables in the equation remain the same, I don't see how we'll turn it around. It may well already be too late to fix the underlying problems. We've become too spoiled. Accustomed to an unsustainable lifestyle, backed by nothing of substance.

However, it has looked pretty damn grim in the past and we've prevailed by changing the game instead of trying to win at the game we were losing.

I hold out hope.

Do you guys really feel the heat? I mean sure the 401K's took a little dump on us on Monday, but really...if you already lived with in your means you should be fine?

I purchased a house that was with in my means....borrowed 1/2 of what I could have. I don't own extravagant cars, purchased a hell of a boat though. We have never had a hard time making bills and the wife and I still manage to put away 16% of our total income every single year. Looking at our income, we are middle of the road earners...not poor and far from rich. We also don't have children....that helps.

We also don't have children....that helps.

Damn skippy it does, my life was peaches and cream until 3 years ago when I took in my niece and now I have my nephew too. I'm ready to return them both for something less like a black hole.

Damn skippy it does, my life was peaches and cream until 3 years ago when I took in my niece and now I have my nephew too. I'm ready to return them both for something less like a black hole.

My, you do have a way with words, hehe. But it is true, the gravitational forces pulling at the wallet and savings can be inescapable when youngsters are in the picture.

And here in lies the problem, people like Ibudin that could afford a child aren't having them (no I'm not degrading your decision at all, just continue reading on before you get up in arms heh), but the people that CAN'T afford children have 2 or more children. That just further burdens our society, raises the taxes for the people that actually would to afford children if they so chose too, etc.

The cost to raise children is astronomically high in today's world. Why the people that actually can't afford children can't figure that out I'll never know.

the movie idocracy comes to mind .... now to find a government hibernation project.

Just a few thoughts:

Population centers would have to become more dense to serve more people with less infrastructure and fuel expended. That 1 hour commute one way from the 'burbs would have to go. If you can walk or ride a bike to work then you tap into a fuel source all Americans seem to have plenty of, you fatty.

Salaries would have to be cut, but less money is better than no money.

Can rail even be made profitable again for moving goods and people? Maybe if it were not the current diesel/electrics but an all electric fed by efficient power plants?

If few are saving, then where are banks getting money to invest on new ideas?

Are we encouraging people to come up with new ideas or are the religious and political pressures too great? Are we just too lazy since churning out the same garbage is more profitable than innovation?

Do you really need a McMansion with all that volume of air to heat and cool, or can a well built smaller house with energy saving technology become a new status symbol? Climate control for buildings gobble up alot of juice. Rolling brownouts suck.

Why do people buy minor stuff that depreciates quickly on credit, such as consumer electronics? Isn't that just plain stupid?

Does our country have a magic number of humans it can support? Can we find a number and maintain it indefinately? Does the government need to limit births, or will children become so expensive to rear that the economics will control population growth on its own?

Heh, if we got back 50% of the money spent on energy somehow, then we would free up alot of capital to get things humming along again. Its just a question of would people want to live in denser communities so that lowered costs across the board thanks to more people served by less infrastructure make up for smaller salaries. It might be the only way to save the economy and reduce our carbon footprint, which also tackles that pesky global warming problem. Tax cuts and the Fed arn't going to dig us out of this but for the short term. We have to re-think how to drive our economy and that is to re-think how we build our economic engines which are the cities and our ability to plan and save for tomorrow's innovations. All the fingers point to these two areas as the culprits. Funny thing is that this is a lesson we already learned better than anyone but somehow forgot after WWII.

Credit is a big part of the problem, and hopefully credit companies are starting to lose money and realize this. My $317,000 house is gonna cost me $700,000 if I take 30 years to pay it off. A TV from rent a center costs $200 a month for 36 months ($7200) or $3000 from a store. But because of credit, we've inflated the cost of things. Things a normal person can't even expect to pay for in a lump sum ... they can buy over 30 years and pay 3x as much. If no one was willing to take credit, home prices wouldn't have skyrocketed over the past 5 years and the crash wouldn't have happened.

When I started my company I figured out all of my expenses could be shrunk down to $1500 a month. So that was my minimum goal, and I put everything else in savings, anywhere from $2,000 to $4,000 a month. For a few years I had to share a house with 5 other people and only 2 bathrooms, maybe not eat out every night, maybe have to watch movies on TV instead of in the theaters, and play a LOT of Everquest instead of racking up $100 bar tabs, and I have to drive around in my grandmother's old '92 Chevy Corsica. Then, three years later I was able to buy a house. But most people aren't willing to live on the cheap, they get the new cars and the plasma TVs on credit debt. They pay three times as much for that same car in order to get it today instead of tomorrow. They end up renting, or getting a mortgage with a variable interest rate because the payments are small - but don't have any savings for when the mortgage rates shift. Don't get me wrong, I have a credit card (3% cash back on every purchase is too good an offer) but I make sure I don't spend more than I can pay back in a month, and generally keep 6 months of expenses (at $1500 / month) in the bank in case I fuck up and can't.

I was lucky. My dad (a spender, not a saver) and my mom divorced. My mom had a job as a teacher and had 2 kids to raise and put through college (though my dad helped her with half of that). She learned how to save and passed that through to my sister and I. When I got birthday money, 1/2 of it went into the bank. When I got a job, 1/2 of that went into the bank. I don't think most kids get that lesson.

As for the economy, its starting to get obvious in my line of work how its starting to shift. I've only been doing this for 3 years so my trends aren't necessarily an accurate picture, but the past Oct, Nov, and Dec I did about 25% less business than in years prior. Jan is up, but a lot of the work is news coverage about the economy (irony?) and Reality TV because of the Writer's Strike - certainly not the norm. Payments are supposed to come 30 days after I do a shoot at the latest, but now its starting to push closer to the 45-60 days mark simply because the economic holds are tightening up on the networks and corporations I work for. A few of my clients have gone out of business directly related to the housing market. I have around 100 clients so the loss of a few isn't that bad, but those companies all had employees who are currently out of a job.

*edit* Now the questions: The stock market here took a dump after Asian and European stock markets took a dump. Are they declining because of the US housing market, or some other aspect?

And here in lies the problem, people like Ibudin that could afford a child aren't having them (no I'm not degrading your decision at all, just continue reading on before you get up in arms heh), but the people that CAN'T afford children have 2 or more children. That just further burdens our society, raises the taxes for the people that actually would to afford children if they so chose too, etc.

The cost to raise children is astronomically high in today's world. Why the people that actually can't afford children can't figure that out I'll never know.

You are correct. This is why I have both of my older siblings children. Neither could afford kids, neither should have had kids, both did and b/c I am believe that children don't ask to be brought into this world and should have someone to care for them and try to help nurture them to realize their full potential I rescued my niece who was 13 at the time. My nephew is an adult but in many regards is a child b/c his mother babied him beyond belief so he's experiencing what life is like in the real world where you have to pay rent and keep your room clean, though he's about to experience the other end of my nurturing side, my foot. He's been with me long enough that he should have started turning himself around. But he's not. He's falling into the same pitfalls that his mother did. I didn't get to him soon enough.

I truly and honestly believe that overspending and bad habits are learned at home. My mother was the worst money manager in the world. As a child I can remember us always been dirt poor and yet she worked two jobs and received child support. But to my mom who is in her 70s and still lives this way, it's all about the moment and not the future. She never planned for tomorrow, never thought of retirement, never considered she should save that windfall for the pitfall around the corner. I grew up this way, with this mentality, it wasn't until after I got married that reality hit home. If I didn't grow up I would be in for a hurting. I guess I was lucky in that the realization hit home. My sister (my nephew's mom is in her late 40s and this lesson has finally hit). Kasey's Dad my brother is 41 and it still hasn't hit home. He is a worthless piece of shit who doesn't care about 2hrs from now as long as he has his fix. The above is all true and yet I bet many of us can relate and know people like it, THIS is what is wrong here.

*edit* Now the questions: The stock market here took a dump after Asian and European stock markets took a dump. Are they declining because of the US housing market, or some other aspect?

The Euro and Asian markets took a dump because not only do we attempt to drive our own economy but we help to drive theirs too (with us driving a HUGE portion of the asian economy with our desire for cheap, child labor produced goods). Our market didn't decline because theirs declined, but theirs sure did because of fears that ours would.

The Euro and Asian markets took a dump because not only do we attempt to drive our own economy but we help to drive theirs too

Thats the Great American Hegemony at work.

What makes it even funnier is that the rest of the world removed from the US, Canada and maybe Japan is all the same in its mutual difference form the US. Metric system. 220 volt/50 hz power. A two prong european plug works pretty much everywhere in the world but a US plug works only in the US and Japan if your tear the ground off. The meaning of the word "football". How living in the suburbs frequently means you are living in a shack next to open sewers while living in town meant you are a high roller.

And yet our independance creates the greatest interdependance for everyone else. The irony.

I truly and honestly believe that overspending and bad habits are learned at home. My mother was the worst money manager in the world. As a child I can remember us always been dirt poor and yet she worked two jobs and received child support. But to my mom who is in her 70s and still lives this way, it's all about the moment and not the future. She never planned for tomorrow, never thought of retirement, never considered she should save that windfall for the pitfall around the corner. I grew up this way, with this mentality, it wasn't until after I got married that reality hit home.

My parents are horrible money managers, and in turn so was I. I too like Fil didn't learn any responsibility about my money until I got married myself, and had to help maintain a household. My dad is 55 and still has no savings for retirement, so he will have to work until the day he dies.

My wife and I don't have much of a savings right now, but that's because we keep pumping it into improvements to our house instead of taking out more debt. We had planned on moving back closer to our families in a year or two (both sets of parents are 2.5-3.5 hours from us now, and about 45 minutes from each other), but we've had to rethink that because of the housing markets.

We still have minor credit card debt (~700 bucks) that we could easily pay off right now if we wanted too, but both of us are building our credit more because of poor choices during and shortly following college. Our initial home loan was an ARM because our credit raitings weren't ideal, but after diligently working to raise our scores, we now have a 30 year fixed at an even lower rate than our initial ARM was.

We do use some store credit cards for consumer electronics, but only if they offer free financing for 18 months or so. We make sure to pay it off in that time so as to not incur any acrued intrest. We don't get anything we couldn't afford now, but why not let our money work for us for a few extra months instead of Best Buy/HH Gregg? I shopped for six months before I got my last pc (which cost me less than I could have assembled it for), and I financed it free for 6 months. I have become a much more ardent shopper. My wife and I make approximately a combined $120k a year, and we still clip coupons. We have a $150k 3 bedroom house, and with our income levels I'm sure we could get a larger house if we wanted. Why though? We get everything we need where we are now, don't have to pay extra utilities for underused space, etc.

Our biggest splurge now that we could do without is that we go out to a significantly nice dinner once a week. We could go to places less expensive, but we can afford it now and it's nice to spend a quality night with my wife and daughter.

Congratulations Taleren. Being responsible and working hard are paying off for you and your family.

We do use some store credit cards for consumer electronics, but only if they offer free financing for 18 months or so. We make sure to pay it off in that time so as to not incur any acrued intrest. We don't get anything we couldn't afford now, but why not let our money work for us for a few extra months instead of Best Buy/HH Gregg? I shopped for six months before I got my last pc (which cost me less than I could have assembled it for), and I financed it free for 6 months. I have become a much more ardent shopper. My wife and I make approximately a combined $120k a year, and we still clip coupons. We have a $150k 3 bedroom house, and with our income levels I'm sure we could get a larger house if we wanted. Why though? We get everything we need where we are now, don't have to pay extra utilities for underused space, etc.

That there is a great point. https://www.emigrantdirect.com/ gives 4.55% interest APY. If you have a $1000 purchase like a computer thats "free financing for 1 year" that's $45.50 of interest free. I need a new bed (one can only take so much pounding after a few years :D) and was gonna buy one outright, but thinking about your post made me realize Matress Discounters is offering 0% financing for a year ... I'll take a free $35 any day.

On that note, www.emigrantdirect.com (http://www.emigrantdirect.com) seems to be the best rate out there and has been for over two years, and its web based so you never have to visit a branch. The only downside is it takes 2-3 days to free up your money so I tend to keep a few thousand in checking and the rest there. If you know of some place better, let me know!

Congratulations Taleren. Being responsible and working hard are paying off for you and your family.

Ditto on those sentiments.

I used to laugh at my mother's constant coupon clipping when I was younger. I stopped laughing when she wrote a check for $60k as a down payment when she bought a duplex to live in after the folks both retired; still thinking ahead, having a renter pay most of the house payment. That downpayment was by no means all of their savings, either. The folks had been workling as property managers in California for about 15 years, and then in Minnesota for the last six before retiring. They knew all the ins and outs about rental property.

Credit is a big part of the problem, and hopefully credit companies are starting to lose money and realize this. Those companies are taking enormous hits right now. The Merrill-Lynches (http://www.ft.com/cms/s/0/00f57f02-c20b-11dc-8fba-0000779fd2ac.html?nclick_check=1) and Citigroups (http://biz.yahoo.com/cnbc/080114/22639976.html) of the nation are writing down billions as the sub-prime problem has metastasized across the economic landscape.

Amidst all this, the economy is on a downturn (http://www.latimes.com/news/nationworld/nation/la-na-stimulus17jan17,1,4923615.story?coll=la-headlines-nation&ctrack=1&cset=true)A stream of unwelcome economic data has added to politicians' sense of urgency. The Labor Department announced Wednesday that consumer prices rose 4.1% last year -- the fastest in 17 years -- led by soaring gasoline costs and higher prices at the supermarket. Average wages, meantime, recorded a slight drop when adjusted for inflation. Earlier this month, the department reported unemployment had hit 5%, the highest rate in two years. I'm not sure that we're "spoiled" at all, as some have suggested. It gets harder to save when your wages are flat and prices increase across the board. I'd say a better definition of spoiled would be Countrywide CEO Angelo Mozilo (http://latimesblogs.latimes.com/laland/2008/01/mozilo-severanc.html), who stands to gain $110 million in severence earnings if he sells the company (which I think Bank of America is buying/has bought). I'm sure it takes a lot of responsibility and hard work to wreck your company and lay off 10,000+ spoiled people, but that does seem excessive.

There's much talk about possible recession (or whether we've entered one now), and that pessimism goes straight to the top (http://www.usnews.com/blogs/washington-whispers/2008/01/22/in-private-bernanke-tells-horror-stories.html?s_cid=rss:in-private-bernanke-tells-horror-stories.html) of the economic (http://online.wsj.com/article/SB120086867005203883.html) food chain.

I hope we find a way out of it, but prospects are poor.

Everytime I hear Countrywide in the news I shudder. They bought my mortgage about a year after I bought my house. Those assholes call me at least once a week trying to get me to open a home equity line of credit or refi, they scare me. And I can't do anything about it b/c they are my lender so the do not call list doesn't mean squat. Or so I'm told, I'd give anything to not have to listen to them doing their best to pressure me. They do not take No, I'm not interested as a real no and keep on yabbering. I just hang up on them.

The real problem is, this is nothing remotely new. We've known we were headed towards disaster for a long time, and ignoring the problem has only made it significantly worse. I know I've said this here before, and when I mention this to someone face to face they look at me like I'm an alarmist, but events in the last few years have shown just how precarious our current situation really is, and just how far we've gone beyond our means to sustain our current civilization is, especially in the United States. Picture the big news stories of resource shortages - Hurricane Katrina, the east coast blackouts a few years ago, even the California rolling blackouts or Arizona's gas crunch four years back due to one broken pipeline. One real catastrophe would wipe us out, and the reality goes beyond our infrastructure. Forget for a moment that our government has demonstrated an inability to cope with domestic crisis, the average homeowner relies on Walmart and the local chain grocery store to sustain their life. The housing SNAFU is obviously a direct result of living beyond our means, but it's only a very small symptom compared to what is actually possible at present - and to answer the original post, no, unfortunately I don't see us realistically turning this around.

The humor in all this is that all I hear about on TV is panic over global warming. While certainly worth concern, we have a much greater crisis building in this country, which would oddly be addressed by the same steps suggested in "going green."