*lol*

Is the US really collapsing? Probably, it is experiencing some problems like other nations do.

I would like to believe that the US is like any other nation that can succumb to wrong decisions and mismanagement to some extent. But generally I am hoping that it can rise above all these problems.

Irving Fisher, the Yale economist known for his infamous call when said that stock prices had reached a permanently high plateau just before the 1929 Wall Street crash.

Today, it’s high time to brush up one of the great man’s more prescient observations. He observed that the downward spiral of debt and deflation caused the Great Depression. Ben Bernanke doffed his hat to Fisher in a 2002 speech. He cited the theory of how fire sales of assets push down asset prices and could lead to a drop in aggregate demand and price levels, meaning, a full-blown financial crisis could wreck the real economy.

As credit crisis gets worse and investors dump stocks to create liquidity, it is time to ask whether the US economy is heading towards a major trouble.

Though the talk is still of a short recession, we must not forget Japan’s lost decade in the 1990s, just as Fisher once predicted, shows that a lot worse can happen.

I wonder, in all of my lack of understanding for economics, if we might apply a metaphor of stellar evolution here ... and suggest that there is only so much fuel to burn to keep the structure self-inflated and after a terminal point has been reached gravitational collapse or spectacular explosion are inevitable... (in terms of a global dependence on unlimited economic growth within a system of finite resources, this is a salient reminder of the precariousness of our collective existential situation)

...this American star has burnt so very, very brightly in the history of this planet...

...of course... stars can also become enormous and yet dull spinning balls of neutrons... passive and burnt out dwarfs of their former selves and shadows of their former glory... but if the US were ever to cease to exist as we know it, we can almost guarantee that it would not depart quietly...

@Graeme:

If one takes your stellar evolution metaphor then USA will collapse and turn into a black hole and not a white dwarf or something because of its sheer size. Then all economies of the world would be sucked in and it would be all over.

This is not going to happen. Hence, though an interesting theory, it is actually an outlandish thought.

I agree with Prince that fundamental changes are needed to stem the rot. However, American people will have to change their mindsets and the way of living if they desire to stay in the forefront. For that generations would be needed when people will eventually know that there’s no such thing as a free lunch.

Asian countries like China and India know that but are gradually adopting the American way of thinking and living. Things like mortgages were almost non-existent a decade and half back. But they are so freely available now. Economies of these countries are booming and people are getting richer (that again is widening the north-south divide between the haves and the have-nots).

Then it is a cycle. Nothing is period.

Death to USA? Seems like a joke or a dream of some fanatic.

Come on people we all know that US is no more a nation but an ideology, which has bought all most whole of the earth under its hemisphere. And yeah economic doldrums come and go but what never changes is the power equation, until and unless the figures are not changed; and which is not happening at least right now.

The US economy has found a great way of coming out of depression, by going to war. I just pray that it finds some other way too otherwise some other country will be getting democracy.