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LetsGoBucsDo not despair. The beauty of our financial system is that we recognize losses pretty quickly and move on (unlike, say, Japan). What emerges is a stronger and more competitive system
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I agree with the fact that we react to the losses much sooner than other countries. But we need to look at what the reaction has been. Lowering interest rates in combination with increasing the money supply will just reward those that took the risks in the first place and send the message that its ok to go right ahead and take the same type risks again!! And the impact to the USD is very damaging.
Our standard of living is in decline due to the USD steep decline. In 2002 (or thereabouts) it was .82 USD to 1 Euro.....now its 1.57 USD to 1 Euro. We are almost 50% worse off!!! In 6 years!!! Combine this with our budget deficit, our consumer debt (first time ever homeowners own less than 50% of their homes?), and our trade imbalance and I conclude that the gravy train is coming to a stop. We have hollowed out our industry, banks used to constitute 5% of the S&P 500; now I think its 25%. Thats just funny money in my book - perhaps I'm too old fashioned but pushing money around doesn't create wealth.
The foundation is cracked and an overhaul is needed. If you combine this with the fact that during the same 6 years we've made it tougher for the best and brightest to come to our country (to study and work)....and perhaps this time around isn't going to be the same - already this is the worst economic response to Fed interest rate declines in the past 50 years (at least thats what I read in the economist the other day).