Why our economy sucks: The best summary…ever

Global warming. Worldwide economic crisis. The idea that the L.A. Dodgers could win the pennant.

All of these sound like the end is near. Some of them are too confusing to contemplate. But Steven Pearlstein, a business columnist for The Washington Post, has shed a little light on the U.S. economy — it’s past, present and uncertain future.

We’ve all read scores of stories online about this stuff, but I felt compelled to bring this particular piece to your attention. Pearlstein’s column offers one of the most salient, user-friendly summaries of how we got here and where we have to go next in 208 words or less.

You can view the entire column here. But trust me, this is the best part:

“A better way to think about the economic forecast is that we are at the beginning of a transition period in which our collective spending as a nation will go from roughly 6 or 7 percent more than what we produce to closer to 2 or 3 percent less than we produce, to accommodate an aging population and the need to put away some savings.

That’s a huge swing, and although it won’t necessarily come all at once and may be accomplished through different means, there is no way to accomplish this task by producing more. We’re going to have to consume less, which means a temporary reduction in our standard of living.

Put another way, we didn’t just have a housing bubble and a corporate takeover bubble and a consumer credit bubble and a commodities bubble. In time, those asset bubbles led to the creation of a bubble economy, with too many airplanes and restaurant seats and hotel rooms, too many office buildings and shopping centers, too many investment banks and media outlets dependent on advertising revenue from car companies producing too many cars and home builders producing too many houses. Shrinking all that back to the right size is what the coming recession is all about.”

Now that’s the situation in a nutshell, isn’t it?