Akkam’s Razor

Why is Nissan cutting production?  Why are Circuit City and CompUSA closing stores?  What's happening in the near future that would adversely affect consumer demand?

I regularly read a gaggle of econblogs, and they are talking about a couple of books - Crash Proof: How to Profit from the Coming Economic Crash by Peter Schiff, and Michael Panzner's Financial Armageddon: Protecting Your Future from Four Impending Catastrophes (Panzer also has a blog to support the book).

In a summary on Economic Dreams, Economic Nightmares, Schiff  debunks some of the usual myths involving bubbles, inflation, and federal monetary policy and economic indicators.  What he runs into is the following inevitability - we are stuck in a cycle where we can't raise interest rates, because it will stall consumption, leading to recession, and we can't drop rates, as it will feed consumption and lead to inflation. In "the old days", we borrowed to produce.  Now, we borrow to consume.  This is not sustainable.  It also point to an eventual devaluing of the dollar.

Meanwhile, Panzer, also summarized on ED, EN, sketches out an economic landscape where saving and security are thrown by the wayside, where residential real estate is used as an ATM to purchase non-durable goods, corporate shenanigans, and a government overobligated by future entitlements like Social Security and Medicare.  The-powers-that-be have misread all the indicators as indications we are entering a brave new era, confusing mania as economic growth.

It's usually at points like this where some pundit says something about "talking ourselves into (inflation, deflation, recession, etc.)".   Talk like that mentioned above is a little scary, and one could see how herd-mentality could turn a trickle into a deluge.