The Meltdown is Far From Over... A New Mortgage Crisis Looms

The Associated Press published an article this morning stating that we are about to enter a new round of the economic crisis:

"Analysts said the next economic crisis might involve malls, hotels and other businesses affected by the mortgage crunch.

Malls from Michigan to Georgia are entering foreclosure, victims of the same crisis that's affected the housing market. Hotels in Tucson, Ariz., and Hilton Head, S.C., also are about to default on their mortgages. That pace is expected to quicken."

During the last economic downturn after the Internet bubble burst in 2001, the economy was born up by inveterate (and incorrigible) consumer spending. Unfortunately, that will not save us this time. The terrible retail sales of late, and the consumer's unwillingness to spend or take on new debt is weighing heavily on the fragile remnants of our economy.

The individual serves the industrial system not by supplying it with savings and the resulting capital; he serves it by consuming its products. -- John Kenneth Galbraith, The New Industrial State [1967]