His “the fundamentals of our economy are strong” comment was the beginning of the end of his chances to win the election.

Roosevelt was a force that no politician before or since has been able to duplicate. He took office during the perfect storm (depression) and stayed in power for a third and fourth term due to another perfect storm (WWII).

We need a candidate. We need a vision. I may be the only republican on this site that says this but I do not believe that the Reagan model will work in the era. I am not saying abandon conservatism. But we are going to have redefine conservatism for the 21st century given the social, economic, and political dynamics of today.

Yes, the country is still more socially conservative than liberal and still more people are for small government than big government.

But the Republican party is DEEPLY corrupt and its leadership is without principles.

The party must change or it cannot come back. How can it come back when it fundamently agrees with the Democrats agenda?

Basic supply and demand, but this time it’s the severe drop in the capital supply (at any price) that’s causing the quantity demanded to fall.

“All the things I own cost me some money every month, some, so far, make me a little more, but NONE of them are worth anything anymore. I have a net worth of less than zero from being pretty close to being free and clear in August.”

“Part of me thinks that the traders and hedge funders and the people holding a lot of dollars who hate America had a lot to do with this.

“Never attribute to malice what can be explained by incompetence.” — (some say) Napoleon

Yes, the financial community (including the two largest defacto hedge funds Fannie Mae and Freddie Mac) are to blame. But attributing the main mindset of the last few years to a politically motivated drive to fail is quite a stretch. Keep in mind that when forced to choose, Democrats will go for greed over a genuine agenda every time.

The financial community has been making the bet that the housing market would continue to rise for many years. And until 2007, it paid off spectacularly for those taking the risks using other peoples money. But beginning in 2007, institutions that had borrowed $97 for every $3 dollars of its own **cough**Freddie Mac**cough cough**, saw their own and more importantly their creditor’s fortunes reverse.

Not a bad risk/reward ratio if you think about it.

Heads, I become a multi-millionaire. Tails, yes I lose my money and have to look for another job, but my creditors lose a whole lot more. Suckers!

Unfortunately, these financial community bets all went bad at the same time. And so now their is very little supply of capital to make the loans that Main Street needs to operate or to invest in itself. And hence the cycle: Lack of credit damages Main Street, which further reduces willingness to lend, which further damages Main Street…

Sounds like your kid quit his job voluntarily - that would not have happened in the Depression.

Things are tough all over, but I can’t help but feel that in great measure the economy 1) anticipates a rough time for capital because of the new president; 2) has been talked down by the new administration because if you take over the reins at the absolute nadir there’s no place to go but up (two-thirds of the economy is consumer spending, so when consumers sit on their hands, everything grinds to a halt); and 3) just needs time to work off the impact of some really bad, really big hedge fund bets on commodities.

I’ve elected so far not to bore everybody here with a “Where’s My Bailout” diary — suffice it to say that Hurricane Ike did a double whammy on business. Most all of my company’s production has been shut in since early September — that means the cash register’s not ringing — while we have been spending money right along due to prior commitments & storm repair. Now that we’re back producing, product prices are half what they were pre-storm. Our company will survive, but many others are badly hurt.

Be that as it may, I firmly believe it is mistake to credit the new administration with too much power over our lives. We have survived adversity before, and we will again.

BTW, achance, I look forward to someday calling a special meeting of the RedState Curmudgeon Committee — I nominate you, me, mbecker & joliphant (if he’s still with us) as founding members — over a frosty glass of an adult beverage. I identify with the cynicism you passionately express in your posts here, and firmly believe that cynicism is one of the perquisites that goes along with gray hair. The younger crowd just doesn’t seem to get it.

My belief from the time it started is that the economic fluctuations we are experiencing happened because.

1. The national debt has been growing faster in percentage and absolute terms than the GDP that is taxed to pay the national debt. If you make a ratio of debt over income large enough, you will be unable to pay off principal on the debt. At that point the road to bankruptcy is short. People with sense see that coming and are acting to protect themselves from it.

2. The Fed didn’t allow the economy to go into recession after the dot-com bubble broke and 9/11. It pumped cheap money into the system. This led to inflated prices on things that the bankers, who were at the spigot where the Fed’s cheap money came out, wanted to invest in: real estate; luxury vehicles; gold; silver; jewelry; other luxury goods. It also led to those bankers and politicians who fed at the government trough wanting to spend more of their cheap money on dubious “investments,” such as the Kyoto protocol, solar powered street lights, bridges to nowhere in Alaska, and creating a Potemkin environmentalist movement where all manufacturing and energy production was moved away from the USA to developing countries that could get as polluted as they liked. We’d keep the USA pristine, for the knowledge workers and financial types who live in it. When the inflated values of these asset classes became too high for normal people to pay for them, then their prices started dropping. Best guess is that by 2001 the market value of housing, for example, was 10% over its fair, affordable value because of the bubble. By the end of 2006 housing was 20% or more over fair value. This caused financial statements based on the value of those items to drop. Other assets are similarly overpriced and will cause more pain when they correct, not only to those who own them but to manufacturers who have invested to produce them, and to their employees.

3. Sarbanes-Oxley, while well intentioned, has driven IPOs out of the US market. Public companies have had their profit cut in half by SARBOX compliance costs. This has kept earnings down, while price-earnings ratios in the stock market went above 20:1, contrary to common sense. In addition, the mark-to-market rule in SARBOX has forced companies holding mortgage-based-securities who have a default on one mortgage to mark them all at zero value.

4. Thanks to Democrats like Barney Frank, Chris Dodd, Barack Obama and Maxine Waters, CRA and Fannie Mae/Freddie Mac were forcing banks to lend money to people without job, money, or income. This got the banks to issue a lot of bad debt at abusive terms to people who were not expected to pay it off through income, but through appreciation of the property.

5. To protect themselves from all these bad loans, the banks that made them figured out they could bundle them into mortgage-based-securities, rank them by risk, and then by buying insurance against defaults, turn them all into AAA-rated investments. Investors bought in big time. These securities got overvalued as well, just like other assets. Problem is, the insurers priced the insurance too low. When the defaults started, the insurers went bankrupt. Hello, AIG! Then the whole house of cards fell.

6. Banks lend out more money than they have in assets to back up those loans. The Fed provides the loans and credit to let this bank-created credit and debt travel with the lendees around the economy. Traditionally, banks have been held to loaning no more than 12 dollars for every 1 dollar they have in the vault. This is called a leverage ratio. Hank Paulson of Goldman Sachs convinced the SEC to let banks use any leverage value they wanted. Leverage values of 30:1 or higher became common. The result is when loans went bad and there was a small run on the bank, the bank quickly became insolvent and declared bankruptcy, called in all the callable loans, and created general chaos.

7. The Democrats and the big media, but I repeat myself, have spent the 8 years of Bush’s presidency talking about how Bush had created the worst economy since the Depression. This trash talking about the economy, coupled with the their promise to repeal Bush’s tax cuts and raise new taxes was noticed. As the time of these tax increases comes nearer people are changing their investments and the way they use money in order to protect themselves from the taxman. This has taken good money out of capital investments and sent it overseas or into assets that store value. This is another reason that assets have risen in price. When Obama got elected, this accelerated.

8. Oil prices went wild. This didn’t help the USA, which used to be an oil producer but became an oil consumer.

“Each of us has a natural right, from God, to defend his person, his liberty, and his property.” –Frederic Bastiat

I saw a commercial today that said you could live like a millionaire on your retirement……Maybe you will see Joe Biden there….

The Physical Fallacy (Warning: Google Books link).

Simply put, “things”…

Now what I don’t get is that my house is the same house it was in August. My boat is the same boat it was in August. My cars are the same cars they were in August. My commercial property down South is the same property it was in August.

…are not “fundamentals.” Value has nothing to do with physicality, but with the minds that supply and demand those “things.”

All the things I own cost me some money every month, some, so far, make me a little more, but NONE of them are worth anything anymore. I have a net worth of less than zero from being pretty close to being free and clear in August.