I am here to help....we are a country of Kool Aid drinkers, and the insanity needs to stop...

I can explain it in laymans terms, but look at the retail headlines today......

Retail is posting big downward year over year sales comparisons AFTER the stimulus checks.

Going into winter, people are not spending. The country is facing sharp increases in home heating bills on top of already inflationary gasoline prices and food prices.

The housing market is nowhere close to turning, despite what many analysts think. The credit markets have tightened up. Everybody in the population had access to mortgages two years ago. The amount of people who now can get access to capital is severly cut, and until banks get money themselves to loan, people do not qualify, especially if Freddie and Fannie are not buying worthless paper. Money will no longer be freely available, the housing market wont turn, just expect it to stop falling at some point, just not sure where.

You say people will just remodel instead of owning a new home....wrong, people are closing their wallets and putting off unnecessary spending. Keep the old carpet, keep the old kitchen, replace something if it breaks, but discretionary spending is going away.

Each January, people spend bonuses on these things, bonuses are either getting severly cut or going away for most people beginning of the year.

I wont get into credit spreads banks are now facing, but because of this, corporations, if they borrow, face much higher interest expense, on top of declining margins...it is a bad combination when faced with declining sales. Two things happen, prices go way up to offset the falling demand, or sales take a huge beating. Right now, since people's access to capital have been constrained, I would look at the latter.

Warning flag: JP Morgan Chase, one of the "best" banks out there, announced 2nd quarter earnings in Mid july, then in August, found another $1.5 billion in mortgage related writeoffs just 3 weeks later.... don't think there is still a problem?

What this means for government spending:

Decrease in gas demand = large decrease in government gas tax revenue.

Decrease in property values = large decrease in government property tax revenue.

Declining stock market = large decrease in capital gain tax revenue.

Declining sales = large decreases in retail sales tax revenue.

Declining corporate earnings = large decrease in government corporate tax revenue.

I could keep going, you get the picture.

The government will have to SEVERLY cut budgets (on top of funding a war), or they will continue printing money. What does the value of a dollar do when this happens.....

Think Gold may make a comeback in the near future??????