The following is an excerpt from today's [Sunday] NYT. I included the analysis and did not include the political stuff. The article may be found in its entirety at:

 http://www.nytimes.com/2008/08/24/magazine/24Obamanomics-t.html?_r=1&adxnnl=1&oref=slogin&adxnnlx=1219608501-oHsHZZgy36jctR6MVsfodw

the economic policies of the next president are going to be hugely important. Ever since Wall Street bankers were called back from their vacations last summer to deal with the convulsions in the mortgage market, the economy has been lurching from one crisis to the next. The International Monetary Fund has described the situation as “the largest financial shock since the Great Depression.” The details are too technical for most of us to understand. (They’re too technical for many bankers to understand, which is part of the problem.) But the root cause is simple enough. In some fundamental ways, the American economy has stopped working.

The fact that the economy grows — that it produces more goods and services one year than it did in the previous one — no longer ensures that most families will benefit from its growth. For the first time on record, an economic expansion seems to have ended without family income having risen substantially. Most families are still making less, after accounting for inflation, than they were in 2000. For these workers, roughly the bottom 60 percent of the income ladder, economic growth has become a theoretical concept rather than the wellspring of better medical care, a new car, a nicer house — a better life than their parents had.

Americans have still been buying such things, but they have been doing so with debt. A big chunk of that debt will never be repaid, which is the most basic explanation for the financial crisis. Even after the crisis has passed, the larger problem of income stagnation will remain. It’s hardly the economy’s only serious problem either. There is also the slow unraveling of the employer-based health-insurance system and the fact that, come 2011, the baby boomers will start to turn 65, setting off an enormous rise in the government’s Medicare and Social Security obligations.

Most of these problems aren’t immediate, which helps explain why they have gone unaddressed for so long. And the United States remains a fabulously prosperous country, relative to almost any other country, at any point in history. Yet Americans seem to realize that something has gone wrong. In recent polls, about 80 percent of respondents say the economy is in bad shape, and almost 70 percent say it’s going to get worse. Together, these answers make for the most downbeat assessment since at least the early 1980s, and underscore that the next president will be inheriting a set of domestic problems as serious as any the country has faced in a long time.

I think the market is falling back to reality. Things were and are over priced for the average income. If you do the math what is the average income verses the average price of a home or even a new vehicle. Example a new home priced at $425,000. The mortgage pmt is aprox. .001% monthly which is $4250. A month. Keeping up with the Jones is not easy.

 b-alto

Unless your income is greater than the Jones family keeping up with them is not a good idea.

Lots of those Joneses are buried in credit card debt. When you are in that hole... stop digging. ;~) 

My credit use to be so bad i couldn't even pay 95% in cash and get the rest on credit,no matter what the item was.Now every body wants to give me a credit card with huge amounts.I still pay cash,it's just so much easier.It's ok for some to have credit but only if u can afford it.If u can't make that new car payment then keep driving that wreck,at least nobody will take it from u when u can't pay.

good advice!

If you have extra $$$, use it to pay down debt. If you don't have any debt [congratullations] SAVE IT.

Now is not the time to buy a new pick up