[wind_magic]

If we go into a serious bear market, and this isn't one yet, the real problem will be government spending.

The economy basically takes care of itself. If times get tough for consumers, they stop spending, and business cuts back, and it goes round and round, until we end up at some point of equilibrium where most of the excess is gone and then we go back into an expansion. That cycle has played itself out repeatedly throughout our history, and before that in European history, and probably well before that. It's natural, it works.

But government is the problem. Government doesn't have to respond to cries from it's citizens to cut taxes, or cut spending, to relieve the burden on it's populace. Citizens cannot just "stop buying" what the government is selling, we are required to pay taxes based on income, sales taxes, etc, we can't stop that. Starving the government of money doesn't help, it just borrows more, or prints more. There is no effective check on government spending.

Even at the local level, since house prices have started to fall, has your local government cut back on services ? Has it laid off teachers, or made any of the other hard choices that will have to be made if it's coffers empty ? Has your local government even lowered it's appraisals on the property you own to reflect market conditions ? They were more than happy to raise those appraisals when prices were climbing, have they been as quick to lower them ?

Even if government spending levels off or even decreases, so long as it isn't decreasing as fast as the rest of the economy is deflating the government will become an increasingly heavy burden to bear.

The government itself could destroy any chance of a quick recovery ..