James Quinn has delivered another fact-filled article on how bad the economic situation is. His focus is oriented toward retailing and the mal-investment that exists as a result of multiple booms and credit expansions. It is consistent with the predictions of Austrian Business Cycle theory (ABC).
Mr. Quinn sees the correction as inevitable, although barely underway. The dismal ending he characterizes as follows:
The rotting hulks of thousands of Sears and Kmarts will slowly decay; blighting the suburban landscape and beckoning criminals and the homeless. Retailers will be forced to lay-off hundreds of thousands of workers. Property taxes paid to local governments will dry up, resulting in worsening budget deficits. Sales taxes paid to state governments will plummet, forcing more government cutbacks and higher taxes. Mall owners and real estate developers will see their rental income dissipate. They will then proceed to default on their loans. Bankers will be stuck with billions in loan losses, at least until they are able to shift them to the American taxpayer – again. No politician, media pundit, Federal Reserve banker, retail CEO, or willfully ignorant mindless consumer wants to admit the truth that the last three decades of debt delusion are coming to a tragic bitter end.
The abuses of the last several decades are crippling the economy. There can be no recovery until a catharsis similar to that described above occurs.