Reply #3: I'm drawing on history and oral tradition in my family

[Warpy]

and I can say that yes, 2009 will suck deeply. The second shoe of bad mortgage paper is going to drop and will likely be far heavier than the first shoe. This is all the mortgage and commercial paper that was written when everybody knew the bubble was about to pop but they were willing to commit fraud to keep it all pumped up a few weeks longer, to keep that illusion of never ending wealth alive.

The bad paper will be through the system by the end of summer, 2010. Unfortunately for us, it will take a lot of good paper with it. We are going to see a lot more mergers and takeovers and government bailouts just to keep financial institutions alive on life support so they'll be there if and when the larger economy is addressed by feeding the demand side of the equation.

It will most likely be bad enough for riots. The riots will be put down by government goons fresh from the battlefield. There will be a huge public outcry about overkill. Then the government, fearing that it's lost control of the situation completely, will allow itself to be dragged slowly toward a few of the reforms that are so desperately needed.

That's what history says will happen.

My own family rode out the Depression, taking their losses and adapting to privation the best they could by developing the skills that keep us alive during hard times.

Good luck to us all. We are certainly going to need it.