“Why not destroy houses that people live
in, destroy schools where children are
taught, and destroy malls where
consumers spend—then rebuild it all to
help the economy?”

This statement also applies to things like cleaning up pollution and harvesting forests. Events like these make the economy appear “better” on the balance sheets, but are actually just wasted resources as your analysis of Cash for Clunkers correctly points out.

While the government will not be able to help with the deleveraging problem that you discuss, I think there was/is something that they can do with the housing problem. However, it would take too long to discuss that here. Similarly, social security’s fixes are well known, and require only the willpower of the the president and congress.

Having agreed with the majority of this (correctly) pessimistic article, I must digress that the three counter arguments offered are the best, or only, ones out there. Again, getting into these other arguments takes more space than available here. Safe to say, the outlook is at best mixed, and at worst dismal. Let’s hope for the former.

With banks unwilling to lend, consumer debt not being paid, and the dollar losing value every day it seems we are looking long term for a solution. Very long term.

As someone dealing with the struggles of the economy first hand, I have to say though, I’m routing against your analysis, and the eloquent reasoning that supports it, for purely selfish reasons.