"The USDA should represent all interests in agriculture and stop its tendency to see itself as a policy advocate for employers."

This really needs to be a commandment for every branch and department of government. Businesses certainly have louder voices than us consumers, do policymakers not recognize that?

As a citizen concerned with our scientific future, I second Lee_Love's message and encourage that not only NASA's budget be increased, but scientific funding in general be increased.

While most of what you are saying is true, it also oversimplifies the situation we are currently facing as a country. Thanks to the credit crunch, innocent people who were paying their bills also lost their house.

Neighbors of these people are finding their property values drop. Credit is tight right now, which is certainly not a good thing, and we've had a headless chicken sort of attitude toward the problem, where we should act before we think lest it be too late.

We've got plenty of collateral damage from this mess. People aren't going to stand idly by and let this happen to them at no fault of their own.

What we need to do now is make sure that in consideration of all the facts, what should we do? If we do nothing and let the economy self-correct on its own, what's to prevent this from happening again? And is doing nothing really fair to those people who paid their bills on time?

EDIT: BTW, fortunately, your prediction of a depression is likely incorrect. Hooray!

What's more important than vengeance is that we make sure this never happens again. It's great if we bring justice to the criminals responsible, but it means very little if we don't learn from our mistakes.

Focusing on vengeance is a bad idea if it distracts us from the problem.

I didn't want to leave this conversation, Mahji_Khan, but I wanted to check the numbers first before responding.

First off, the U.S doesn't practice unregulated free trade right now. Disappointing it is for me to say, we have a long way to go before we can claim any serious U.S economic data on free trade and it's effects.

Secondly, I can't claim that free trade is perfect, in theory or in practice. Not everyone benefits from free trade. The same, however, can be said of protectionism, that not everyone benefits from it either. In making economic decisions, both us as individuals and this administration need to be asking: "Who benefits from this, and who suffers, and does this maximize the difference between the benefits and the costs?"

Now, I must first correct your first point. The dollar certainly has been getting weaker over time. I remember hearing on the news the day when the Canadian dollar was worth more than the USD.

What we have not seen is the subsequent decrease in imports, rather, our imports continue to increase. Americans, it seems, perhaps don't care about the rising costs of foreign products (imports are inelastic), or perhaps there are other factors. Things such as the rising price of oil and other essentials which we cannot live without. The causes for our rising imports are complex. Perhaps there is a quick fix for this problem, but I doubt it.

Regarding borrowing, any government which borrows too much threatens to collapse in on itself. Other countries have learned this the hard way. I hope that the U.S government learns this lesson soon, and reserves the use of the deficit as a temporary measure, rather than the apparently permanent style our federal government has adopted.

It is sad, because when it is used in the temporary manner that economists prescribe, it can have wonderful economic effects, such as pulling us out of a recession (or depression, see the Great Depression).

As far as how much a government can borrow, theoretically its bound by the same rules as us, in that it can only borrow as much as it can reasonably promise to pay back. Seeing as how the government has a potentially endless income stream, mainly us and our children, and it has a perfect record when it comes to paying its bills, it might be a while before the federal government hits its limit, regardless of GDP and whatnot.

On the speed of the economies, this is assuming that we only have exclusively exports or imports. Our children may have expensive cars, but they will at the same time have fairly inexpensive televisions, or coffee, or energy perhaps. Besides, I think that this is a little bit of an exaggeration. Also, isn't the alternative to just always have expensive cars? How does that help our children?

I don't have the expertise or the numbers to comment on your last point, unfortunately. I will have to look that up sometime. I will say that it is distressing to see foreign profits coming from our pockets, but there is no economic reason I can think of as to why this is a bad thing. Also, Toyota produces cars domestically in the U.S. They pay taxes and provide jobs to Americans.

I agree with your last comment completely, and I'll add this: If we aren't trying our hardest, and other countries are, why should we expect to come out ahead?

Mahji_Khan has already expressed a good response to this, so I'll borrow his words.

"Mainly, if we are to say that the average American can not do the math on a housing bubble, or a stock bubble, or an oil bubble, or any other bubble that is coming, then are we not saying that average American's can not be responsible for these types of assets?"

Your story constantly deflects the blame to people who are "utterly incapable". If we don't understand the system we use, why should we expect it to work anyway? Why shouldn't we hold responsible the people who are a willing part of our failure?

Yeah, it's very likely that you and I are saying the same thing, just with different names.

Sometimes, I wish it weren't so novel a concept to examine our options objectively and choose the best one. Sometimes it boggles my mind to see people make decisions based on "it feels good and we have no choice" and not "because its the best choice". Until we overcome this hurdle, we've already lost at solving our own problems.

These are very good points, and I certainly cannot account for the cost of every externality of every system. Obviously, those must be judged on a case-by-case basis.

However, your example, taxes, is already taken into account in the model. Yes, foreign manufacturers don't have to pay income taxes, but it is not correct to just make the case that the only reason cars are cheaper is because they do not pay income tax. There are _many_ other factors involved in the cost of production, such as transportation costs, raw materials costs, labor costs, etc. You cannot fairly make that assumption.

However, for the sake of argument, lets assume that this is the sole difference between domestic and foreign producers. Transportation costs are the same, labor costs are the same, the only difference is the foreign producer does not pay income taxes to their gov't. Thus, it is accurate to say that, in the short term, our government will receive less money now through tax revenue. Now, there is no sound economic reason why the government cannot borrow money now as long as in the long run it pays it back. If the government waits a couple of years, will it be able to pay off its deficit without raising taxes? (Holding other things equal, of course)

The answer is, of course, certainly. As we import more and more cars, our dollar will weaken. At a certain point, the price of imports will become greater than it costs to make it here ourselves. Great! Domestic production returns, tax dollars flow back in. Even better, our weakened dollar means that exporting American products becomes a good idea. The U.S will certainly be collecting tax dollars on those, and barring some freakish economic disaster, we will be able to easily recoup the tax dollars lost from the imports we collected in the past. In the long run, the government does not lose tax revenue.

The same, on some level, also applies to other benefits. Saving $2000 per car means that we have a lot of extra cash which can be put to health care, education, retirement, etc..

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As to the velocity of money, I am not sure why the FED cannot counteract this with monetary policy. I will be reading up on my monetary policy literature tonight I guess.

This sounded strange to me at first, but apparently GM did create the first hydrogen car in 1966. http://www.hydrogencarsnow.com/gm-electrovan.htm

Of course, the first commercially-available hydrogen car was/is produced by Honda.

Anomar, you are correct in stating that this is not the fault of the average person, but at the same time, this mess would not have occurred if these people had been better informed by reading the fine print, asking a couple of questions, doing the math, etc... Businesses shouldn't have been making those loans, but at the same time, people shouldn't have been taking them either!

What we have seen is a ripple effect, as the problem grows far beyond people who made bad decisions and begins to affect others, such as the value of your home. The true devastation of allowing people to make stupid loans, _and_ allowing people to take them.