Economy on Fire

According to an LA Times article today, people across the country have begun burning down their homes and crashing their cars in attempts to escape the constraints of their mortgage, home, and car payments. Given, the trend is still small at this point, but Insurance Fraud Investigators are sitting up and taking note, eager for their home institutions (if an insurance company could indeed be called an institution) to maximize their profits and deny as many claims as possible.

It's hard to ignore the parallel between the current trend and that of the suicidal Brooklyn Bridge Wall-Streeters of the great depression, albeit to a far lesser degree. Admittedly, our current recession hasn't yet spurred our economy into a downward spiral sharp enough to induce such a level of manic depression and sheer panic at the dire state of one's condition.

Perhaps this is because in our current state of economic downturn, the big guns aren't being held as responsible for the downturn of their businesses as they might have been in 1929. Take Bear Stearns for example. Even after their initial Fed bailout raised protests from some, the price per share paid by the Fed for the financial giant was increased voluminously.

Some Americans are being repaid in the form of tax breaks this year, but none on so grand a scale. According to a CNN.com article, the average tax return in 2008 will be about $2500-- far too small a sum to pay off the average debts of consumption-happy Americans. Furthermore, with a high marginal propensity to consume in the US, it's unlikely that whole check will be going towards paying off old debts. For many families, Uncle Sam may just be financing the purchase of a new Wii.