Digging your way out of debt?

For some thoughts on what that’ll do to the big picture, I turn to Jeremy Grantham, the value stock investor and noted bear who has been warning about this financial meltdown for some time. . Grantham is chairman of institutional money management firm Grantham, Mayo Van Otterloo, which manages $120 billion.

From his third-quarter newsletter…

“We were all spending and, in the case of the U.S., importing as if we were much richer than is in fact the case. Particularly here in the U.S., increasing household debt temporarily masked some of the pain from little or no increase in real hourly wages for 20 to 30 years….

"Household debt since 1982 has added over 1 percent a year to consumer spending. Unfortunately, this net benefit does not go on forever.”

This will happen worldwide “and will be a permanently depressing feature of the next decade or so compared with the last decade. It is indeed the end of an era.”