[timr]

Well, then. If you say that it won't impact the global growth rate, then I guess I won't worry!

This type of comment (along with the old "9 out of 5 recessions" saw that's being thrown-around, below) is nothing but blind optimism. This article isn't idly discussing economists' new year's predictions -- it is citing some highly disturbing economic metrics.

This problem has nothing to do with production or technology. We're on the tail-end of a debt-fueled asset bubble. If those borrowed assets continue to deflate, millions of people will eventually go bankrupt, and bankrupt people don't spend money on non-essential goods. Manufacturing supply isn't the problem; gains in production efficiency won't help.

Moreover, if you've been following US consumer trends at even a casual level, you know that a huge percentage of our spending has been financed by foreign debt. This article is suggesting that the funding for this debt-spending is about to go away. Again, "increases in production and technology" don't help you at all, when the problem is that people can't buy things.

I don't know what's going to happen tomorrow. But I do know that it's short-sighted to argue that the economy will be fine, just because "it's always been fine before." That's basically what you're doing.

[Xichekolas]

I didn't read GP post as saying the economy would be fine ... but nor will it be the all ending apocalypse where starving soccer moms sell their children into slavery to pay their mortgages.

Frankly if the world really is doomed, what are we going to do about it anyway? Why waste all this effort fretting over a 1% chance that we can't really change or prepare for, when we should be paying attention to the 99% likelihood that we will need to keep working in the existing economic framework.

Sure, it's ridiculous to argue that the economy will always be fine because it always has been, but it's equally silly to say that just because the current situation is new and confusing (and maybe even scary) that we should all quit our jobs, buy land in Montana, and stock up on guns to fight off bandits.

All this economic doomsday talk over the credit crunch is starting to sound like Y2K all over again.

[gills]

We're on the tail end of a debt bubble. The recent asset bubbles have been (potentially unexpected) side effects. It's almost like the banks are using a flawed implementation of lisp which executed for-each when asked for map! Sorry, I couldn't resist... :)

I think production and technology do matter, and will eventually be the mechanism by which we bootstrap the next credit cycle. When wealth is scarce and people can just barely scrape by, who survives? Those who invent and innovate so people can have better lives for the same price. When you get right down to it, the only ways to do that are through new technology and more efficient production.

It's true that much of the credit for our debt party is going away, and many people could suffer as a result. And you are correct that in the near term technology and production will not save us, but it is the only way to recover in the long term.

[cglee]

Well said. That's why it's important to work on things you care about; even in downturns, you'll still be motivated to create.

[kingkongrevenge]

> it's important to work on things you care about; even in downturns

This does not mean it makes sense to naively proceed with plans based on the status quo, which is a common sentiment on this board. Advertising and media get slammed in real recessions (2001 wasn't one), which is rather disastrous for Web2.0 as I understand it. Opportunity, or at least security, is largely limited to the non-discretionary side of the economy.

I read PG saying you should ignore recessions because nobody can time them. Well, that's just not true. People with solid macro-economic grounding have always understood roughly where we are in the business cycle. If you rely on the newspapers and NBER pronouncements for your understanding of the economy you will have the impression that it's all guesswork, but that only reflects on MSM incompetence and conflict of interest with advertisers.