The central tenet is that it is the 1970's all over again. And I've been bleating this for years to my friends (who are sick of hearing it). This is how the story goes: 1) long, expensive and difficult foreign war that becomes increasingly unpopular at home 2) increasing government spending on military adventures means increases in debt and inflationary policies 3) oil producing countries realise the dollars they are being paid with are worth less and less, do their best to manipulate the oil price higher through supply shortages 4) oil and gold prices start to rise precipitously 5) interest in alternative energy starts to rise, and detroit car makers get into serious trouble 6) recession and long bear market for stocks 7) high inflation and low growth

You can (roughly) overlay this pattern on the late '60's, early '70s, with (6) running up until the late 1970's. And you can lay it on 2002-onwards, we're at point (6) at the monent. There were no CDO's in 1970, but I'm sure there was something else. I would classify the CDO/Subprime mortgage problems as a problem magnifier rather than a problem cause. In theory, as long as a person can keep paying a subprime mortgage, or can refinance to a better rate a few years down the track, there's nothing wrong with them. However, too many were given to too many people, and thus what might have been a small slowdown turned into a banking and credit crisis.