I only read the section labeled 1. (I'll read the rest later), but already I think the guy is overstating his case. He describes the current situation as a financial collapse, which is much more severe than the crisis it's being characterized as. I think that both terms are overblown for what is actually happening.
I'm no economist, so take everything I say with a healthy degree of skepticism. But I think that all we're seeing is the end of an unsustainable way of life, in terms of the way credit has been allowed to flow. All of the expansion in personal possession, corporate profits and everything else has been predicated on the availability of ease and plentiful credit. And of course, credit was extended to people who didn't really deserve it, but the thinking seemed to be that one credit-worthy borrower could carry ten non-credit worthy ones (this is an arbitrary number by way of analogy, by the way). That turned out to be an erroneous assumption.
So what we're actually seeing is a kind of snap-back. The economy will survive, banks will survive, and individuals will survive; they just won't survive the way they did before, which was essentially spending more money than they had. I heard a story about a family with over $100,000 of credit card debt. Both the husband and the wife lost their jobs in a week's span, and because they didn't want to lose their home, they started paying bills on their credit cards. Now they're really screwed though, because the cards will eventually be discontinued, and they'll be in the same boat, only with $100,000 + debt helping it to sink faster.
My question is this: if a family loses their income, and immediately are forced to start paying bills with imaginary money, could they actually afford their lifestyle in the first place? Somewhere along the line, affordability came to mean, "I have $10. That thing I want costs $10. I can afford it!" That's wrong. Saving is critical to financial health, but in the deluge of credit, that point has been lost. Why save when someone will give you an allowance, which is what credit basically is? People are being caught with their pants down by an economic downturn, and the first thing everyone does is start drumming up talk of "crisis" and "collapse".
Does that mean that there's a systemic problem with the American (and by extension global) finance system? Perhaps, since financial institutions are making loans to people who really can't afford them. But what I think we're really seeing is the aggregate of poor individual decisions coming to fruition. Poor individual decisions by everyone involved: borrowers, lenders, economists, etc. The end of easy credit is not the end of the American economy. It just means that you can't get a car with no money down anymore. You can't live in a four bedroom house if you only make $30,000 a year anymore. We don't have a crisis of finance or confidence, but one of common sense, and we're being reminded of some basic financial rules. Don't spend all your money today, because you might need it tomorrow. We've been betting against tomorrow for years, and now that we've been dealt a bad hand, it's a crisis. It's a crisis in the same way that leaving a loaded gun around is. It's a tragedy when it happens, but it's not like you couldn't see it coming. That's why I'm wary of all these bailouts. If it's necessary to help companies to survive, then do it. But don't try to artificially inflate a culture and lifestyle that has now proven to be faulty.
Is our current way of life unsustainable? Yes. Is this the beginning of the end? It very well could be, but I don't think so. Every empire ends, but I don't think America will have a spectacular demise. I think what's more likely is that standard of living will gradually decrease, and one day we'll wake up and not be the world's only (or greatest) superpower; we'll all say a collective "When did that happen?" and then continue with our lives. Maybe that's just wishful thinking on my part.
Like I said, I'm no economist, so this could all be ***-backwards conspiracy-theory level wrong. Just my thoughts.
