Things to consider in the coming days:


Problems Bernanke Faces


Falling real estate prices
Subprime housing mess
Alt-A mortgage mess
Pay Option ARM mess
Sharply rising unemployment
Rising credit card defaults
Commercial Real Estate implosion
Global wage arbitrage
Falling US dollar
Overheating China
Slowing global economy
Tapped out consumers
Implosion of $500 trillion in derivatives
Solvency issues at banks
Forced unwind of massive Yen carry trade
Boomer retirement Pension plan assumptions in an economy starving for yield
Rising corporate defaults


Why The Credit Bubble Lasted For Decades

Single household breadwinner became two household bread winners
Interest rates were at 18% headed to 1%
Internet revolution provided tremendous numbers of jobs
Lending standards declined
Housing boom provided jobs
Rising asset prices supported consumption
Every one of those things allowed the credit bubble to keep expanding. Many of those factors took years to play out, decades in aggregate. The decline in interest rates alone made housing more affordable for quite some time, at least until things went extremely loony a few years back. And when housing prices went loony, progressively lower credit standards kept the expansion going. The madness ended when there was no one left to buy, and no way to keep that portion of the credit bubble expanding.