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Let's take a look at "belt tightening" starting with a Washington Post article Businesses Tightening Their Belts.

U.S. businesses are holding off on hiring, delaying new investments and trimming expenses, creating a new threat to the nation's economy.
My Comment: This is of course ass backwards. The reason we are in this mess is because businesses expanded with reckless abandon, well above and beyond the fundamentals of birth rate and immigration. That expansion itself created artificial demand which made it appear the economy was on good footing. We now see the foundation was quicksand.
Corporate America is reacting to a pullback by consumers and the crisis in the financial system. Businesses are acting defensively, seeking to avoid the massive layoffs and dramatic falloff in profits like those in 2001, when they were in less sound financial shape.
My Comment: Massive layoffs are coming regardless of what they do, and the financial shape of banks has never been worse.
The cutbacks are large and small, but it is the cumulative effect that has economists worried. Business belt-tightening is likely to create an additional drag on the economy, contributing to the period of slow growth that economists almost uniformly expect and to the recession that some fear.
My Comment: Talk of slow growth and upcoming recessions is silliness. We are already in a recession and the odds are overwhelming it will be a severe one.
"For the last few years, the emphasis has been on looking for ways to grow," said Mark Toon, chief executive of EquaTerra, a Texas-based consulting firm that advises large companies. "Since August, companies have been looking for ways to reduce costs."
My Comment: Ah Yes. The sudden attitude change. Consumers changed their attitude and that forced businesses to change their attitudes. It's a downward spiral of attitudes. For more on this theme please see Keeping Down With The Joneses and Credit Lines Dry Up, Homeowners In Withdrawal.
An index of optimism among small business owners fell in January to its lowest point since 1991, according to the National Federation of Independent Businesses. Several surveys of chief executives report confidence in the future at multi-year lows. And purchasing managers at non-manufacturing firms expect a sharp contraction in business activity, according to a January survey by the Institute for Supply Management.
My Comment: Does that look like a recession is coming or does it look like we are in one?
So far, this is a more gradual, tentative pullback than the corporate sector experienced in the 2001 recession. Then, businesses had overexpanded -- which was the major cause of the slump -- and consumers and firms in the financial sector were the collateral damage. This time, consumers and the financial sector are cutting back, and businesses are the collateral damage.
My Comment: So far, a man who did a swan dive off the top of a tall building 1 second ago is still alive. How many times did we hear "so far it's only subprime" before realization set in? Any talk that that businesses did not overexpand more than 2000-2001 is absurd. Back then it was a dot-com, telecom, fiber bust. Now it is residential housing and commercial real estate. Given that consumers are 70% of the economy, this overexpansion is far worse.
"The corporate sector is not what brought you to the edge, but it could push you over," said Joel Naroff, an economist who has advised businesses for decades.
My Comment: Corporate overexpansion followed residential overexpansion with a lag. On that basis residential brought us to the cliff. But let's not downplay the role of corporate overexpansion. It was very significant. In fact, unsustainable retail spending accounted for a huge percentage of jobs.
Businesses entered this period of distress in far better shape than in the last downturn. In the third quarter, just before the economy started its slide, nonfinancial businesses had liabilities that were 3.5 percent higher than their financial assets, according to data from the Federal Reserve. In the comparable period of the last downturn, the fourth quarter of 2000, their liabilities exceeded assets by 24 percent.
My Comment: Banks are clearly in far worse shape and the credit crunch and inability to roll over corporate debt at reasonable rates is going to crucify all but pristine corporate debt. Sadly, there is very little pristine corporate debt. The idea that businesses are in far better shape is a mirage.
As companies pull back, the effects ripple through the economy. Rebecca Barnes, co-owner of Bargain Boxes Moving and Storage in Manassas, routinely replaces her truck fleet. This year, "I'm not even considering it," she said.

"If I'm not buying a new truck every two years, then Cowles Parkway Ford is not getting my sale on a regular basis," Barnes said. "Everything has an effect on everything else."
My Comment: "Everything has an effect on everything else" is exactly correct. And with that thought, here are a few things to consider:
Things We Don't Need
  • We do not need more Steak n Shakes (SNS), Pizza Huts (NYSE:YUM), McDonald's (NYSE:MCD), Panera Breads (NASDAQ:PNRA), Starbucks (NASDAQ:SBUX) or any other restaurants for that matter.
  • We do not need more Wal-Mart (NYSE:WMT), Target (NYSE:TGT), Lowes (NYSE:LOW), Home Depot (NYSE:HD), Best Buy (NYSE:BBY), or Bed Bath and Beyond (NASDAQ:BBBY) stores.
  • We do not need more Toyota (NYSE:TM) dealers, GM dealers, or Ford (NYSE:F) dealers).
  • We do not need more nail salons, dry cleaners, movie rental places, storage facilities, etc.
  • We do not need more houses from Toll Brothers (TOLL), Beazer (NYSE:BZH), Hovnanian (NYSE:HOV), Lennar (NYSE:LEN), Pulte (NYSE:PHM), Centex (CTX) or Ryland (NYSE:RYL) . Inventory of houses is at an all time high.
Given that we do not need any of those things, can anyone tell me where the jobs are going to come from to support the economy?

Before you start emailing me about alternate energy, please think about timeframes, why the jobs will be in the US as opposed to elsewhere, and how many jobs we are really talking about compared to the massive overexpansion of housing and retail stores.

Before you start emailing me about infrastructure, think about what the costs will be, property taxes, "small" things like municipalities going bankrupt, and once again how many jobs can reasonably be provided.

Belt tightening is not a threat, it should be embraced! We are in this mess because we failed to tighten belts. The real threat is we continue our spendthrift ways. Postponing the inevitable will only make matters worse.