Next Stop, Recession: This Financial Meteor Storm Is Headed Our Way

Many of those about to be vaporized did not grasp the fragility of the "prosperity" they assumed was both solid and permanent.

Business-cycle recessions are not just inevitable, they are necessary to flush bad debt and marginal investments/projects from the system.

The next recession--which I suggested yesterday has just begun--will be more than a business-cycle downturn; it will be a devastating meteor storm that destroys huge chunks of the economy while leaving other sectors virtually untouched.

The dynamic that's about to play out is simple: wages for the bottom 95% have gone nowhere for 17 years, while costs have soared far above official inflation for everyone exposed to real-world costs.

We have filled the widening gap between stagnant household income and rising expenses with debt. This stop-gap works for a while, but eventually the cost of servicing debt consumes the entire budget, leaving little to nothing to save or invest.

Absent savings and incentives for productive investment, productivity falters once productivity falters, wealth is no longer being generated or distributed widely.

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