The Economy.. will hi end audio mfgs lower prices?

I think quality at a certain price point, rather than items costing 3x as much for that extra 2% in performance, are going to be where the markets will be strong. People like us will still be spending money on gear, but it may not be as much as before. $2000 interconnects and $15,000 preamps just aren't going to be popular. Others looking to get into 2-channel will have a set budget, and it may not be $15,000 anymore: perhaps they only have $4000 to spend, and that is still alot of money. They should be able to get something that sounds great for that price, not "mid-fi".

What scares me most is the basic lack of economics or business savvy espoused in this thread.

The original poster asked, "Will there be a shake-out in high end audio? Will we continue to see $10k preamps and $30k amps?" The answer in short is, "Yes." Companies that base their sound business plan on primarily selling $10k preamps and $30k amps will probably be ok. If you can afford to buy $10k preamps and $30k amps, you probably aren't working for the State of California, and job security isn't one of your top concerns. It's those companies that base their business model on "average Joes" who want a taste of the good life are those that will really suffer.

Some will and some won't.

Some will also raise prices in order to appeal more to those who are luxury minded, can still afford it, and use price as an indicator of value.

There is a lot of disinformation out there.

Yes, there certainly is. Would you like me to unspin it for you? It's worse than it appears. Do you understand the derivatives market? Are you ready for the Option-ARM resets?

The last significant recession in 1981 was marked by 11 percent unemployment and interest rates of 19%. We are currently at 8.5% and interest rates are at .35%.

Interest rates in 1981 were 18% (only for a short while) due to Volker cranking them up to fight high inflation. The FFR is where it is today to fight DEFLATION.

Unemployment figures were redefined during the Clinton Era to only include U3 rather than the broader U6. Underemployed people are considered "employed" also.

If unemployment today was measured using the same metric as in 1981, you would see that it is in fact higher today.

Much of our contraction comes from a false real estate economy that was allowed to foster between 2003 and 2007, the so called "bubble."

The contraction doesn't come from a "false economy". It comes from loans being issued to people who never in their lives would have been able to pay it back. (This is where you really want to understand derivatives)

The bubble started in 1997 with the .com bubble. Instead of letting it deflate, interest rates were lowered and kept artificially low for too long. Add to that the widespread used of "Stated-Income Option-ARMs" more lovingly referred to as "Toxic Neg-AM Liars Loans" and BINGO...bubble on top of bubble.

Sure, the DJIA may only be wound back to 2002 levels as you say, but do you know how many companies have been swapped out in the last 18 months? Where do you think it would be had those companies been left as part of the index?

Will the 92% of gainfully employed people still buy quality goods?

once again, BLS has changed the way they report unemployment figures. Comparing 1981 to 2009 is apples to oranges unless you want to use the same way of defining unemployment. Don't forget the 13% living under the poverty level. Also, a person making $10/hr at a 40hr/week job isn't in "poverty", but I doubt that person will be spending much. Most other people were using credit as money. Now they are broke and have to pay the piper.

this country drives 40% of the global GNP

2008 U.S. GDP was $14.3T 2008 World GDP was $78.3T. The U.S. is about 18% of World GDP.

Approximately 2/3 of U.S. GDP is consumer spending.

From 2005-2007 Consumers were using their homes as ATM's to the tune of about $1T per year on average. Take the velocity of money into consideration and that $1T contributes to much more than just $1T of GDP.

Now that the HELOC money is gone, where will that extra $Trillion come from?

The government spending won't create inflation for a long long time. They are currently filling the black hole that the derivatives market comprises.

BTW...the global OTC derivatives market is over $1 QUADRILLION.

And to those that think that "foreign" markets will pick up the slack...sorry...there has been no decoupling.

Not every manufacturer will go out of business of course, but it won't be smooth sailing for any of them either.

Yes, I have multiple degrees in Economics and Finance.
No, I didn't lose a SINGLE penny in the meltdown.

Is the problem "solvable"

ABSOLUTELY!

...just not in the ways they are attempting to solve it.

If you can afford to buy $10k preamps and $30k amps, you probably aren't working for the State of California, and job security isn't one of your top concerns.

If you can (could) afford 10k pre-amps and 30k amps you may have worked in the finance/mortgage/RE industry and are currently unemployed.

Fixed that for you. ;^)