Bad Timing

What I don't think a lot of people realize is just how bad timing this housing crash is. It comes on the precipice of the Baby Boomers retiring where we'll be forced to raise taxes to pay for medicare and medicaid and social security. Seeing raising taxes is the most likely scenario, you can forget lowering taxes as an option to help stave off the recession (which results in the Democrats ironically advocating a stimulus package, only to take it away from you by letting the Bush tax cuts expire). But the housing crash and it's consequential contagion to other areas of the economy is also accelerating another disturbing trend;

the labor force participation rate.

For the past 40 years or so we could rely upon more and more women to enter the labor force and largely keep upward pressue on GDP growth which would minimalize if not mute the effect of recessions.

But women are participating at rates equal to men now, and now that Gen X women are coming of child birthing age, they are starting to drop out of the labor force bringing the trend back downwards. This combined with the discouraging effects of the housing crash, is resulting in an overall decrease in the labor force participation rate, meaning less and less people are looking for work when in order to afford the retiring masses we need more people than ever working in the economy.

Again, you wonder why the dollar is tanking.