I was brooding about the (dire) state of the automobile industry, and thinking that however pragmatic a short-term rescue for GM & Co might be, it makes no long term sense to enable them to continue as they were. Why? Because that would just be to encourage them to continue making products that are no longer desireable or needed. (It’s strange how silly SUVs look now.)

As usual, Mark Anderson has an interesting take on what’s going on.

I would like to suggest a way of viewing today’s layoffs in a different light. It now appears that we have been living on borrowed money, literally, since about 2000. Whether you are looking at house pricing and the housing boom (and bust), or stocks, or commodities, or consumer items, it’s all basically true: the pricing of the last eight years was supported by too much personal (and corporate) debt. Alan Greenspan gets most of the credit in the U.S. side of this story, but that’s a different tale.

In that sense, layoffs are not “bad.” Our society tried to live beyond its means, we invented fake ways of making fake money, all built on debt and fake financial structures. All of that now has to come down. The jobs we are “losing” never really existed, by and large. Rather, that level of employment, at least in the way those jobs were allocated, was itself, mostly, also fake.

We are now rewinding back to 2000, like it or not, back to a time when borrowing was high but not exponentially approaching infiinity; when house prices were high in many places, but not doubling and tripling in short order; when stocks were expensive, but not hundreds of times earnings (and not fueled by borrowed fake money).

Once we have done this rewind, down to what you might call a “value base,” a base level of employment justified by a normal (and now temporarily reduced) workload, we can allocate jobs, work hours, and money for salaries all over again, as a society. Guess what won’t happen? All the smartest kids in physics won’t end up on Wall Street. If they do, we’d better all move to some agrarian economy.

I can only imagine how hard it is on families to live through this Rewind Period, but I also suspect that knowing it is a Rewind, rather than an Infinite Collapse, should be helpful. I hope it is.