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LetsGoBucsYes the % of foreclosures is small, but its about double the normal rate and there is still about another 9 months worth of subprime mortgages that will be reset with higher rates. That will push up the % some more. I agree with the sentiment that on its own that doesn't mean there is an economic crisis. But the falling house values - which will fall even more, means that there is nothing left to "cover" consumer debt.
But thats just one part of the overall story - the much larger issue is that our government is horrendously in debt, our trade balances are very negative, the value of our currency is going down rather quickly, inflation is back, and our government doesn't have the backbone to address fundamental issues we face.
I actually agreed for many years on the comment about drilling more oil. I now actually think that we might be better off not drilling in Alaska and waiting 20-30 years for the Middle East to exhaust their supply. This is basically a strategic resource that we may want to hand onto as long as possible. The price of oil isn't going way down until we find a way to cut consumption, especially in cars....as car growth in China was 40% last year, Russia 35%, etc, etc throughout the developing markets.
Americans simply consume more than they should and are going to learn some hard lessons......I just hope the government doesn't penalize those that save and are financially responsible to try to help those that aren't (of course the government has already done this by pushing interest rates down and increasing the money supply - $ has tanked and inflation goes up).