Here's the real truth about the matter

Well, that's what's gonna happen, all right. The credit crunch is gonna crunch consumers. So, what should have sent signals about ten years ago (or more) as the average U.S. consumer started creeping into a negative savings rate will soon become very, very clear: you can't borrow your way into prosperity! Not with a second mortgage (or even a first mortgage, really) or a car loan or a small loan for Xmas and especially not with the single most powerful demonic entity in the U.S.: the credit card!!! It will be the revenge of Dave Ramsey (even if Dave sucks at macroeconomics) and Elizabeth Warren (who got the macroeconomic situation just right) and others who basically counsel consumers to develop a positive savings rate or else (and remind politicians to enable and encourage the middle class to do that or else). These "bottom liners" have been ignored for too long and we're all about to pay the price for it.

So, if the American consumer is finally priced out of easy credit, the economy should start to contract in waves. And that's when trouble really begins.

I'm not too convinced there's going to be much that can be done to prevent this and I suspect the effects will be more widespread than most commentators understand. Or if they understand it, they are loathe to admit it.

Hopefully my little Cassandra routine here is simply me crying "the sky is falling," but I don't believe that.