How far is America away from the depression?

America government borrows huge money from foreign countries to boost it’s economy. To make people to buy house, buy cars, computers, cloths, and loan people abusively. It creates demand and heavily debt itself. Now the house is overbought and overbuilt, people default on its loan, foreclosure soars as house price drop. People lost it’s life-saving money and banks write off as people can’t pay back. This crisis began. Demand vanish, job cutting, people don’t have money to consume, banks are struggling because people can’t pay back the loans. Credit market frozen up.

Now government want to unfreeze up the credit and order banks to loan each other up. However, the government has it’s own problem. We shouldn’t spend much more than we earned in the first place. http://investment-blog.net/should-we-spend-more-than-we-earned/

Now U.S is the biggest the debtor of the world and paying largest interest in our taxpayers cost. http://investment-blog.net/which-country-has-the-worlds-largest-negative-account-balance/

The recovery is limited to our debt.
http://investment-blog.net/us-is-the-biggest-debtor-and-its-recovery-in-this-recession-is-limited-by-its-debt/

Our GDP is screwed up
The Truth is that we now require about $5 of debt to generate $1 of GDP.
http://investment-blog.net/how-much-debt-we-need-to-generate-1-of-gdp/

Can American create the demand again? It seems so unlikely. But government is working on this out. The growth in past few years is irrationally made by our raising debt. Banks lend money to everywhere to anyone. Banks caused the troubled alone with government’s huge debt. America is in a serious trouble.

This crisis is possible to lead us to a deep painful recession or another depression. the comparison between 1929 crash and 2008-2009 crisis:Great Depression happened in 1929. It took over 10 years to cure.

Effects of depression:
13 million people became unemployed.
Industrial production fell by nearly 45% between the years 1929 and 1932.
Home-building dropped by 80% between the years 1929 and 1932.
From the years 1929 to 1932, about 5000 banks went out of business.
http://investment-blog.net/us-1929-great-depression-vs-2008-financial-housing-credit-crisis/

So how far is U.S away from the depression?
Darn few believed a Depression would follow the crash back then. Today with a crisis of confidence, the liquidity crisis, and ratio of debt:asset dwarfing the late 20s, zero savings rate, greed/corruption, lack of Depression era regulations and enforcement - I can see why people are making the comparison…
http://investment-blog.net/the-1929-1933-crash-took-stock-market-down-90-todays-market-down-45-half-way-there/

Related Posts:

• Should We Spend More Than We Earned?
• U.S 1929 Great Depression vs. 2008 financial, housing, credit crisis
• 15% of all mortgages currently in default or foreclosure (CNN Money).
• The Second Leg Down of This Great Recession Could Be Worse Than 1930s.
• How many down months before we admit we are in a depression?

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