I really need it,thank you very much!!!…

Look, I am very sorry you have lost half your savings, but the point of this post is that I am also worried about the other half.

I think your point would be valid if I was saying:

“As I say, the whole crisis has now become ONLY a state of mind really.”

I am not saying this, as Vangrieg points out, it is also very real.

My point is that we will only get out of all this (and save the other half of your savings) when we have policies which can convince people they will work. This is what will shift the state of mind. At present we don’t have that. At least I don’t believe they will work. I think there are others who think like me. What’s more, if what the ECB, the EU Commission and the IMF are up to now doesn’t work, then the problem will become even worse, becuase people will be even less likely to take risks.

To see what I think should be done you need to read around my other posts.

@ Xavier

Well, we have fundamental different perspectives. So you and I are running an “experiment”, but nice to see you are staying the course to actually see what happens.

“What I think however is that once people have paid off enough debt, they will then begin spending and the economy will revive.”

Well, as you probably noted on the blog, Japan real estate prices hit 1984 level, German ones are at 1995 ones and poised to drop backwards. How many more years, or decades, do you think these people need to keep saving before they will be willing to start spending again?

Or at what point would you be willing to throw the towel in? ie, what is the critical reality test for you? I think if we are not all out there testing our theories every day, we become mere ideologues.

Some businesses turn this into competitive advantage. Last year only one big automotive manufacturer increased sales in US. Hyundai offered leases and financing with option of no penalty termination in case the buyer loose his job.

Spoken as someone who did not just lose 50% of one’s retirement savings at the age of 65.

I don’t believe this as an outcome. I concur people are saving and I concur the shift of wealth into paying debt rather than investment or spending is reducing economic growth.

What I think however is that once people have paid off enough debt, they will then begin spending and the economy will revive.

The main bugbear in my view is taxation. Western first world States now extract *so* much wealth from their economies that economic growth is sickly at best. It’s like trying to be healthy when you have cancer.

People (households, “investors”, purchasing managers, central banks, CEOs of banks, hedge funds and “real companies”), act based on their belief about what will happen. This makes economies move. The only reasons why this stuff is never analyzed are a) it’s too difficult, therefore top-down approaches are used and b) it wouldn’t look awfully scientific and professional.

Yet basing analysis (and therefore beliefs) on assumptions that big numbers are so big that they correctly indicate what is (and will be) happening is what led the banks and all of us into this mess.

At the same time, only when people will start to believe that things will improve we will start seeing positive changes.

Just my 2 non-economist’s cents.