Next Stop, Recession: The Financial Meteor Storm Is Headed Our Way

• Next Stop, Recession: The Financial Meteor Storm Is Headed Our Way
  by Charles Hugh Smith, http://www.oftwominds.com/
  Many of those about to be vaporized did not grasp the fragility of the “prosperity” they assumed was both solid and permanent.
  –
  Business-cycle recessions are not just inevitable, they are necessary to flush bad debt and marginal investments/projects from the system.
  –
  The next recession–which I suggested yesterday has just begun–will be more than a business-cycle downturn; it will be a devastating meteor storm that destroys huge chunks of the economy while leaving other sectors virtually untouched.
  –
  The dynamic that’s about to play out is simple: wages for the bottom 95% have gone nowhere for 17 years, while costs have soared far above official inflation for everyone exposed to real-world costs.
  –
  We have filled the widening gap between stagnant household income and rising expenses with debt. This stop-gap works for a while, but eventually the cost of servicing debt consumes the entire budget, leaving little to nothing to save or invest.
  –
  Absent savings and incentives for productive investment, productivity falters once productivity falters, wealth is no longer being generated or distributed widely.
  –
  After eight long years of filling the widening gap with borrowed money, the jig is up: the returns on adding debt have diminished to zero, and the financialization games that were supposed to be temporary emergency measures are now permanent.
  –
  read more.

end