Permanent Disconnect

I had a thought today that I wanted to bounce off some people and hopefully get some kind of input. I will go through and publish comments on a blog later in the week. My thought is this:

With the following tidbits in mind

• The worst housing recession since the great depression
• Falling home prices likely to both accelerate and persist for some time
• Job losses due to said housing bust
• Home ATM closed
• Adjusting ARMS squeezing finances
• Oil possibly to $100
• Negative savings rate

Is it possible that we could see a permanent Economic Disconnect? What I mean is that with the FED injecting over 400 BILLION dollars into the banking system over the last month and a half, reduced interest rates, a stock market running wild, a credit crunch that lasted a total of 3 weeks, dishonest earnings reports, big banks never having to mark their holdings to market, and a ton of other baloney, is it possible that:

• Consumer spending will not even dip?
• No recession for US economy?
• Housing comeback as an asset class?
• No real pain at all?

We went from a point where on a Wednesday in August, Ben Bernanke thought inflation was a concern and no rate reduction was needed, to a Friday the same week where Mr. Boom Boom Bernanke, after talking with the heads of major banks, was convinced the end of the financial world was at hand. Rates were cut aggressively after a 48 hour about face. Either that was a scam by the banking industry, or there is more than meets the eye about all this stuff.

Have at it!