Will The Credit Crunch Steal Christmas?

Speaking of Grinch's stealing Christmas, shoppers are spending less this year, just one example from a pile of economic indicators to turn south over these last few months. Does this mean no Wii for me? With oil prices on the ups, will I be asking Santa for coal this season?

So, let's exchange our amateur philosopher's armchair for our amateur economist's ring cushion.

After the dot-com bust and 9/11, the Bush economic strategy was to flood the markets with money (while giving lip service to strong dollar policies!). This was done through tax cuts, and rock bottom interest rates. All that cheap money helped consumer confidence as well as corporate profits, but failed to create jobs or increase wages.

Now we're on the brink of a new bust with the housing bubble, brought on by those same low interest rates, and complicated by an unregulated market for exotic loans. This has been covered for more then a year by that NYT Casandra Paul Krugman.

Will this dampen the holiday spirit? My guess is not much. The American will to shop is much, much stronger then their fear of debt, and I don't feel good about this either. A little caution, even better, an investment in precious metal commodities, seems like a good idea.

We're really in uncharted territory here, but it looks to me like the perfect storm.

We'll just have to wait and see if the economic fallout reaches the North Pole.