Consumers are to blame for our economy...right.

J

jbenko_IHB

New member
<a href="http://norris.blogs.nytimes.com/2008/10/30/consumers-drag-economy-down/?apage=2#comments">I guess we dragged the economy down eh?</a>



This guy is on liquid crack. I guess we are to blame for our economy...for not spending even more money and not borrowing even more.



I'm very bearish and I'm also very skeptical at the numbers our govt reports month after month. They are clearly trying to avoid mass panic/collapse and they are grasping for last straws and firing their last bullets.



Comments after this article are quite telling as to how people actually feel about the economy and is very informative to see peoples perspective. Oh and there are ALOT of comments...
 
I agree with him. Consumers have:



* houses they can't afford

* revolving debt they can't service

* BMW leases they can't pay

* stagnating wages

* too little retirement savings

* an overinvestment in equities



Hell yes it's consumers fault.
 
[quote author="effenheimer" date=1225445275]I agree with him. Consumers have:



* houses they can't afford

* revolving debt they can't service

* BMW leases they can't pay

* stagnating wages

* too little retirement savings

* an overinvestment in equities



Hell yes it's consumers fault.</blockquote>


He is suggesting we are not spending enough and as a result we are contracting.

But to what you were saying, yes its partially the consumers fault for not analyzing their own numbers. However, it is our government that enabled people to buy and keey buying. It is the failed policies of our government. This includes the FED with the creation of MBS as well as making money cheap by lowering interest rates.

This is not the consumers fault, well it is in a twisted way as we vote idiots into the white house.



I'll give you a quick example related to my dog. She loves to eat. If I kept giving her food, she will literally eat till she died. That is why I regulate the amount she takes in and as a result she lives.



So if you are going to blame the irresponsible consumers...then why do we need a governemnt period? What is their job?
 
I hear that horses will do the same thing if they're given too much feed.



Homo sapiens is supposed to be smarter than that. 30 year fixed freely available for under 5% is like a gift from God, and we (metaphorical 'we') blew it.



I don't know if having the government protect us from ourselves is the right answer. I'm leaning more towards a financial darwinism.



What, J6P just had the limit on his $23k-balance revolving tradeline lowered to $23k and now has a 640 FICO as a result? TOUGH! He never should've been carrying that type of debt load in the first place.
 
[quote author="blackvault_cm" date=1225446080][quote author="effenheimer" date=1225445275]I agree with him. Consumers have:



* houses they can't afford

* revolving debt they can't service

* BMW leases they can't pay

* stagnating wages

* too little retirement savings

* an overinvestment in equities



Hell yes it's consumers fault.</blockquote>


He is suggesting we are not spending enough and as a result we are contracting.

But to what you were saying, yes its partially the consumers fault for not analyzing their own numbers. However, it is our government that enabled people to buy and keey buying. It is the failed policies of our government. This includes the FED with the creation of MBS as well as making money cheap by lowering interest rates.

This is not the consumers fault, well it is in a twisted way as we vote idiots into the white house.



I'll give you a quick example related to my dog. She loves to eat. If I kept giving her food, she will literally eat till she died. That is why I regulate the amount she takes in and as a result she lives.



So if you are going to blame the irresponsible consumers...then why do we need a governemnt period? What is their job?</blockquote>


Well there is some truth to it. People are so nervous about this economy and they are stop spending eventhough they are not affected by this economy, not yet anyway. That is how the depression in 1929 started out as a garden variey recession. Then people stop spending, then we have depression.
 
[quote author="effenheimer" date=1225446640]I hear that horses will do the same thing if they're given too much feed.



Homo sapiens is supposed to be smarter than that. 30 year fixed freely available for under 5% is like a gift from God, and we (metaphorical 'we') blew it.



I don't know if having the government protect us from ourselves is the right answer. I'm leaning more towards a financial darwinism.



What, J6P just had the limit on his $23k-balance revolving tradeline lowered to $23k and now has a 640 FICO as a result? TOUGH! He never should've been carrying that type of debt load in the first place.</blockquote>


No I agree with you. I would be leaning more towards irresponsibility by both parties. Its like parents letting kids do whatever. Who is to blame there?



It just make me sick to my stomach thinking about the fact that we are bailing banks out and even sicker if we re-write peoples mortgages to help them.

I wanted to vote for McCain...because I'm anti spreading of wealth. Nobody helped me when I came to America...I shoveled manuer while i tried to pay for college. But McCain is also for spreading of wealth...when he mentioned he wants to bail people out of their mortgages. It makes me cringe.



Honestly, they should let market be the market...not manipulate it. If it collapses, so be it...that way we can learn from this...atleast for a decade or two..
 
the writer is right; when consumers don't spend, it does indeed drag down our economy. the US economy has become nothing more than a giant ponzi scheme... oh wait, the correct term is "service-based economy".
 
<a href="http://www.nytimes.com/2008/10/26/business/26view.html?_r=1&partner=permalink&exprod=permalink&oref=slogin">http://www.nytimes.com/2008/10/26/business/26view.html?_r=1&partner=permalink&exprod=permalink&oref=slogin</a>



Both parties are to blame for this housing bubble.

<a href="http://www.factcheck.org/elections-2008/who_caused_the_economic_crisis.html">http://www.factcheck.org/elections-2008/who_caused_the_economic_crisis.html</a>
 
[quote author="acpme" date=1225491645]the writer is right; when consumers don't spend, it does indeed drag down our economy. the US economy has become nothing more than a giant ponzi scheme... oh wait, the correct term is "service-based economy".</blockquote>


So you suggest we continue to spend more? More of what we don't have? Our whole economy is fake and garbage. It was built on credit not sweat. We spent our way into "success" if you want to call it that...now the party is over...the debt has to be paid back.



Our government keeps printing money as thats the solution to the problem we are in. Let things crash, let things burn. Will it painful? sure. But our government will just create 10x more problems for us down the road. (via inflation)



I don't disagree that our economy is draging because of spending...but the suggestion that we should spend more of what we dont have is absurd.



BTW. Maybe we should go spend. Go stock up on canned foods and toilet paper as inflation is coming to stores near you. This economy is done for it and the way out is a recession. People view it as this horrible thing, but its a good thing. Its medicine.
 
People also think that now that he market has rebounded a bit that things are peachy. Just think about it logically. Just 2 weeks ago we were in mass panic that the whole world will collapse and now things are fine? It will get ugly...very soon. Either we can let things crash, or we can create hyperinflation. But this has to be resolved one way.

The sad thing is our governments way to resolve this is through printing money...oh boy...*buckle up*
 
[quote author="blackvault_cm" date=1225493537][quote author="acpme" date=1225491645]the writer is right; when consumers don't spend, it does indeed drag down our economy. the US economy has become nothing more than a giant ponzi scheme... oh wait, the correct term is "service-based economy".</blockquote>


So you suggest we continue to spend more? More of what we don't have? Our whole economy is fake and garbage. It was built on credit not sweat. We spent our way into "success" if you want to call it that...now the party is over...the debt has to be paid back.



Our government keeps printing money as thats the solution to the problem we are in. Let things crash, let things burn. Will it painful? sure. But our government will just create 10x more problems for us down the road. (via inflation)



I don't disagree that our economy is draging because of spending...but the suggestion that we should spend more of what we dont have is absurd.



BTW. Maybe we should go spend. Go stock up on canned foods and toilet paper as inflation is coming to stores near you. This economy is done for it and the way out is a recession. People view it as this horrible thing, but its a good thing. Its medicine.</blockquote>


I agree with you. But there are very few people out there who are conservative with their money. The politiicians are buying their vote by promising this and that.
 
[quote author="blackvault_cm" date=1225493940]People also think that now that he market has rebounded a bit that things are peachy. Just think about it logically. Just 2 weeks ago we were in mass panic that the whole world will collapse and now things are fine? It will get ugly...very soon. Either we can let things crash, or we can create hyperinflation. But this has to be resolved one way.

The sad thing is our governments way to resolve this is through printing money...oh boy...*buckle up*</blockquote>


I think most people think the worst is over. Not sure how accurate that is.



OT, any prediction what the stock market will be if Obama or McCain win? Is the market already price in with Obama as the next president?
 
<blockquote>

I think most people think the worst is over. Not sure how accurate that is.



OT, any prediction what the stock market will be if Obama or McCain win? Is the market already price in with Obama as the next president?</blockquote>


Heh. THe market ALWAYS prices in everything. How accurate is more the question, but then again...the markets adjust for it.



I think they priced in Obama winning, if McCain wins the market should pop up slightly as that benefits institutions. However, I think further news about the economy down the road will overshadow both of these clowns. At gunpoint I'll vote for Obama because at this point I'd rather take some risk with him in hopes for greater reward. McCain is just a dumba$$ and Palin is a crack whore that belongs in showbizz.
 
[quote author="blackvault_cm" date=1225493537][quote author="acpme" date=1225491645]the writer is right; when consumers don't spend, it does indeed drag down our economy. the US economy has become nothing more than a giant ponzi scheme... oh wait, the correct term is "service-based economy".</blockquote>


So you suggest we continue to spend more? </blockquote>


nope not at all. just pointing out that the writer was correct though -- in its current screwed up form, there is no hope for this economy without consumer spending. it doesn't place blame on consumers so much as it shows how we've gotten ourselves into a situation where there's only one engine that runs this economy. i agree with the sentiments there will be a prolonged period of blah as we begin to unwind out the current mess and wait for the next technology shock to restart growth.
 
GDP is made up of consumption, investment and goverment spending. We have for quite some time had consumption to where 70% of it is consumption. And now they count durable goods (autos, appliances, etc...) as investment rather than consumption. So yes, if the consumers pull back and the government spending and/or investment spending don't increase, then the contraction is due to consumers not spending enough.



That being said, I've heard a few arguments lately that suggest we may be heading to a change in society where we consume less and save more. In the short run that is going to hurt the economy, but in the long run it would be great for us. The dollars we save instead of spend are then available for investment.
 
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