I compare our current situation to a forest fire and I fully expect a recession to occur sooner rather than later. We have learned that forest fires help clean out undergrowth and forest floor litter. Lightning is going to cause fires and if they are allowed to burn, they keep the flammable material to a minimum. When not allowed to burn, the buildup causes unrelenting fires that burn for months. We also learned about seeds that need intense heat to open and depend on fires for their population’s survival. Fires also return to the earth, the necessary nutrients the soil supplies for growth. After years of growing seasons, nutrients are depleted. Fires rejuvenate the soil.
Our current economic situation is analogus in that the credit bubble, the loose lending standards (not just in housing), low or non exisent risk aversion, inflation (the real kind not the one that the gov likes to blind us with), irresponsible monetary policy (and you could go on and on) have been allowed to run amok. like allowing the underbrush in a forest to accumulate without allowing for mother nature to “take its course”, all these things add up to something BIG when you are forced to deal with them as a whole instead of having dealt with them appropriately as they occured they were extinguished by a troop of smoke jumpers.
Unfortunately that is where we find ourselves today and in order to cleanse and rejuvinate the soil, so that the seedlings can flourish, and grow (in the form of new business, jobs, and prosperity).
The trees, the anmimals, and the forest are all still there and flourishing it is the dead wood and litter that fueled the fires and now the forest are clean and well nurished. Yes it will be painful, and a lot of people will get hurt, but that is the price we pay for our irresponsible behaviour. Lets face it the people that will get hurt are the ones who are ill prepared ie no savings, highly in credit debt (think home, cars, plasma tvs, etc.) It is unfortunate but we have to learn somehow.
