Bursting Bubbles
Why the economy will go from bad to worse

In 2000, President Clinton could legitimately boast of the “best economy in 30 years.” Unemployment was low, wages were rising at all income levels, and the poverty rate was headed downward at a rapid pace. But after President Bush took office in 2001, the economy fell into recession, shedding jobs and causing real wage growth to slow and eventually stop altogether.

A convenient story explains this sharp economic reversal. According to the script, Clinton eliminated the deficit through progressive tax increases and spending restraint. This deficit reduction lowered interest rates and spurred an investment boom, which was the basis for the extraordinary growth of the late ’90s. Then Bush came into office and quickly squandered the surplus with his tax cuts to the rich and military build-up. As a result, the deficit skyrocketed and the economy tanked.

It’s a good story, but the reality is quite different. The Clinton boom was built on three unsustainable bubbles. One of them, the stock bubble, has already burst. The other two bubbles—the dollar bubble and the housing bubble—are still with us. The dollar bubble is starting to deflate, and the housing bubble is perhaps just now reaching its peak. These bubbles created the basis for the 2001 recession and the economy’s continuing period of stagnation.
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  thanks to Cursor

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U.S. Bankruptcies Rise to Record High

U.S. bankruptcy filings rose to a record high in the 12-month period ending March 31, U.S. court officials said on Thursday, as the weak economy hurt personal finances.
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  thanks to Wampum