The Worst is yet to Come... Brother, you have no idea!

"The average American used to be able to borrow to buy a home, send their kids to a good school [and] buy a car," Davidowitz says. "A lot of that is gone." The end of rampant consumerism is ultimately a good thing, he says, but the unraveling of an economy built on debt-fueled spending will be painful for years to come.

In the video Davidowitz makes the assumption that people are spending less and thus must be saving more. I don’t think that is quit right, many people I know can’t save money… they don’t have enough of it. I know I am living paycheck to paycheck, and it isn’t easy. I will say however, that people have stopped living above their means and began surviving to make ends meet.

Simply: if people aren't spending the money and people aren’t saving the money, where did the money go? It’s not like we have less monetary currency. Someone spends a dollar at a company, that company pays someone a dollar and they then spend that dollar. I doubt if the companies are hording the money at the top so thus the money must be pooling at the bottom like Davidowitz suggests. Though, being at the bottom I can say: I don’t know anyone who is not depleting their savings trying to pay rent and food.

But then where did the money go? I didn’t exist… it was loans and credit, spending the dollar we never had, accustoming the companies to getting money that didn’t exist and inflating the prices (if we will pay 2 dollars then they will charge 2 dollars, even if we only actually have 1). Then the debt got too big, we couldn't pay off the credit cards, after that we defaulted on the loans and then realized we can’t buy whatever whenever. This is how the economy should have always been, before was an illusion. That’s where we are at, not saving… but not spending what we don’t have. Which is good, but i think could be a big threat to the middle class.

I have been desperate for a new pair of shoes, having worn mine for the last 4 years. But to pay off rent and food each month, breaking even. I don’t get paid enough because the job market is flooded. How am I going to get new shoes, I can't even save for them or pay them off of credit.
I wonder if the difference between a recession and a depression is the difference between wanting to buy a new pair of shoes but knowing the value of that money and savings; and not at all even being able to even save for a new pair of shoes. Many of Davidowitz's observations are correct, except for people aren’t saving the money instead of consuming-- they’re just not capable of consuming.

Obama's Foreclosure Package: Click here to watch the video