The Economic Situation (6) - Strong Economy

The impact of the credit crunch will mostly be limited to the three sectors mentioned in previous posts. The rest of the American economy is incredibly strong. The strength of these sectors should more than compensate for the decline in the construction industry and the finance sector.

The big unknown is this. Will the credit crunch spill over into the rest of the economy? The situation might get serious, if the credit crunch feeds into other sectors of the economy through high interest rates and tight loans for investors.

The American money system is seriously flawed and will eventually collapse when God has had enough of American shenanigans, but in the in the medium term I expect it to keep lurching on from minor crisis to minor crisis. As the politicians and bankers prop it up to cure one crisis, they will sow the seeds that create the next problem.