Anyone getting the feeling the American consumer is going to spend spend spend until there's nothing left?
Like a crack addict, the American consumer may be forced to turn tricks soon to get that one last high. He won't stop spending it appears until he's lost his job, he's lost his house, he's lost his family, he has no money, and there's no more credit to be had.
That day is coming.
And then the recovery can start.
November 14, 2006
HousingPanic Stupid Question of the Day
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38 comments:
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Those in debt will have more stress than those without debt. I am not buying into the apocolyptic scenarios that many of the soldiers of fortune are portraying here. I do believe that there are going to be a lot of people put into there place because of the upcoming crash. People who thought they were calling the shots in their lives are going to find themselves stuck in jobs they hate and houses that are tired because of their debt.
I think a lot of people are going to learn the beauty of living small.
A lot of people don't own their homes.
Their homes own them.
When the bankers double the money supply, there is plenty to go around -- and things inflate (housing, stock market).
When they decide to put out fewer loans (government, mortgages, etc.) the money supply starts shrinking (contracting) as money is sucked out in Interest but not put back via Loans.
When the money supply contracts, you have a recession. When it contracts for a long while, and severely, you have a depression.
Every recession/depression in US history has been for this reason.
The 1929 Stock Market Crash was blamed for the Great Depression, but it was actually the subsequent money supply contraction that caused it.
Give this PDF to all the clueless people you know -- it really teaches you the real deal about finance, debt, interest, etc.
http://debt.cpa-site.com/
I'm seroius -- print it out and give it to people. It's only 8 pages. Leave copies in the bathroom stalls :)
Imagine if enough people could read this -- the stock market would finally correct, people would pay off their debts, etc. It would be great!
I was at ikea this weekend, (purchased a table). When I went to pay for it, the cashier, a young girl, 18 or so, asked if i was using debit or credit. When i said credit, she turned to one of he co-cashiers and said something to the tone of "if i had a credit card, I wouldn't be shopping here". Like if having a credit card is a license to spend more money. I guess such is the attitude these days
True story- I dated a chick in China. She was into spending big, but I was not. She said that spending money was a way to enjoy life. It seems that the Chinese younger generation is following our path int odebt. Good news is that I dumped that bitch.
Does the government not site the mantra 'spend your way out of debt'. Will we see another TVA?
>> Good news is that I dumped that bitch.
Yeah, right. SHE dumped YOU and you don't even know it, you cheap tightwad bastard!
Who has more to loose, the person who has borrowed too much or the person who lent him the money?
In America there are no debtor's prisons and Visa doesent send goons out to bust kneecaps.
If you abuse credit for too long people may just stop lending you money.
keith, all i can say is: You're right
It seems there is a hollow in the heart of American Culture - a space that cannot be filled.
Americans try to fill the void with products because of the temporary high purchasing gives them. But the high is fleeting and all they are left with is the empty feeling.
How empty will they feel when they can't spend anymore?
Home buyers now have the upper hand and they should use any means necessary to buy a home at a price they can afford. To do this they should look at all aspects of the property including the mortgage debt against the property. Since mortgage debt is a lien and is public information a buyer should subscribe to one of the web sites and pay the $30 subscription to find out what debt is owed on the property. This will include 1st mortgage and Heloc. You can also go to a county assessor website and determine when the house was purchased so you don't make some flipper rich. Lets be smart when we do buy! Keep our debt below our eyeballs.
panicearly wrote:
“Taking on more debt just to get out of debt!”
--------------------------------
Doesn’t this sound like that old algebra problem in which you are 2/3 of the way across a bridge and a train is coming? And you have to decide whether to run toward the train, or away from it?
Borrowers had better understand what they are doing, because here comes that train!
Americans try to fill the void with products because of the temporary high purchasing gives them. But the high is fleeting and all they are left with is the empty feeling.
How empty will they feel when they can't spend anymore?
"MUST... HAVE.... THE PRECIOUSSSSSS!"
(Gollum! Gollum!)
Yeah, right. SHE dumped YOU and you don't even know it, you cheap tightwad bastard!
Yep proud to be a tightwad bastard. As I owe nobody any money, and get more ass than I can handle. WaKE UP GUYS THE TRICK IS TO GET DOWN THEIR PANTS SPENDING AS LITTLE AS POSSIBLE.
when I get a bankruptcy notice on a debtor with a revolving loan account such as a credit card or line of credit, 95% of the time the line has been maxed out to the limit within the past 30-60 days. you can't tell me people can't figure out that they are borrowing money they have no prayer to repay. they take it because they can before they default and send the account to a loss. it is rare that I see someone not do this just before taking the plunge.
My MasterCard who art in plastic Visa be thy name, Thy bill will come and I’ll be done in bankruptcy as in chapt. seven. Give me this day my daily fix, and forgive my past debits, as I forgive those who balk my spending. And lead me not into Wal-Mart but deliver me from Starbucks, for thy is validation, and the gay prostitute, and the purpose for living, for ever and ever. In Chinas name. A men.
the Chinese chick wouldn't be a bad deal provided she felt happy (and subsequently horny) by spending her own money
;>}
Yes, into perpetuity the American can spend, but resources are scarce.
Been there, done that. Lucky for me, I was able to see the light before the situation got too dire. Unlike some people, their credit card payments become more than their take-home pay.
Sadly, there will be some who will start to steal other peoples money and/or credit to continue their feeding frenzy. THOSE are the ones you worry about
Once credit begins to tighten we will see a liquidity crunch that will cause at least moderate deflation.
I sure hope you are not in gold or other commodities when this happens. In times like these, cash is king.
"Anonymous said...
True story- I dated a chick in China. She was into spending big, but I was not. She said that spending money was a way to enjoy life. It seems that the Chinese younger generation is following our path int odebt. Good news is that I dumped that bitch.
Tuesday, November 14, 2006 7:22:30 PM"
I just dumped an American version of this... bought a house she can't afford, running up credit cards, and has a lust for the "finer things in life" expensive wine, bags, shoes, clothes, perfume, going out to lounges, new car, all on $50,000 a year.
Guess who was expected to help pay for all of this?
You got it. lol
Gonna be a very affordable Christmas for me this year. :)
Whose cash is king?
The US dollar? Euro? Pound? Swiss Franc?
I need a big house so I can put all my rubbish, unnecessary things for living, somewhere.
The average Joe in debt, when has it ever NOT been so? Throughout history the moneyed class has "owned" the working class. Serfs, indentured servants, all the mom and pop shops who use to have a credit ledger for their poor customers know that some would never be able to clear their books, pawn shops, pay day loan centers, people selling their children into slavery in third world countries or as children brides to pay for debt, what makes American's any different than any one else in history?
The story will always be between the haves and the have nots, those in debt and those with all the money. Even if you are middle class and own your house outright you will never OWN it with taxes, upkeep, living costs, etc. Debt like religion is meant to control the masses and neither will go away in our lifetimes.
Foxwoodlief is right, debt is a part of every culture.
However, in the third world they are not borrowing away their freedom to pay for flat-screen TVs and cars on 3-year lease.
The problem is people as social animals are highly susceptible to influence and hence desire for things ridiculous can be created in people, some people more easily than others.
It is not a coincidence that Nike spends more money on marketing their shoes than they do on making their shoes. Advertisers know that if you through enough marketing at consumers desire can be generated and stimulated.
Sure HDTV has a clearer picture than standard TV but how clear does Larry King's ugly mug need to be? Sure LCD and plasma TVs are thinner, but after you get it in your home, the difference is only 12-feet deep. However, you fill isles of these things in Costco and BestBuy and before you know it you will feel as if you want one. But why?
Have you ever gone to a Disney World vacation and after seeing store after store full of Mickey Mouse crap you feel as though you really need to bring some home with you. Well once you get it home and the marketing isnt in your face you question why you ever thought you needed that crap.
There are countless examples of how merchandise is thrust so far in your face that after a while you feel as though you need it.
It happens to all of us, even me. I read all this crap about the iPod, see it everywhere, and then when a newer thinner iPod comes out with the typical hype I feel like I want it, and I don't even listen to music!
Don't judge American culture to harshly because in the end we are all highly impressionable. It takes a strong will and a keen mind to avoid having one's brain reprogrammed by hype.
Even Honica knows the power of repetitious marketing. He must spend hours every day filling the pages of this blog with his hateful nonsense. He knows that if he says it enough times, people will eventually start wondering if there might be some truth to what he is saying.
It is hard to be on-guard all the time and it is hard to know the difference between needing something and thinking you need something. The secret is to have a healthy skepticism and a logical mind and then you can resist.
I can't get credit cards due to my irresponsible spending habits during my younger years. My credit is shot. Been paying cash for shit for 10 years. That is the BEST thing that ever happened to me. Now I make 92k and no credit debt. Except my student loans and a home I purchased with my wives' A credit.
1) don't swear
2) don't threadjack
3) don't bore
simple
Hey cash man- 10 yrs of bad credit. You have been forced to learn how to live in your own means, a lesson that will be bestowed harshly on millions in the next 3-5 years. Remember cash in hand means opportunities will be available sooner or later.
You know, the interesting thing about recessions is unemployment SKYROCKETS but GDP hardly falls at all.
What does this mean? It means the rich are keeping the profits and the working class are getting screwed.
I have said this in other blogs & say it again.
Nothing short of banktruptcy is going to change American behavior of lavish spending.
After all, American way is to spend the money that you do not have on stuff that you do not need.
"You know, the interesting thing about recessions is unemployment SKYROCKETS but GDP hardly falls at all."
No dumbass, by definition a recession is a period of negative GDP. And ask some former dotcom millionaires how their fortunes weren't affected in the last recession. Get a clue man.
Now go back to reading that second hand copy of People's Weekly World you keep next to the crapper.
There is a reason the Japanese have been able to survive their decade long recession without half the country killing themsevles or turning into complete anarchy.
They have a very high savings rate amongst individuals. They only put maybe 5 to 10% of their savings in stocks or speculative plays. The rest is all in conservative savings accounts earning not much interest, but it tends to still build up massive nest eggs going into retirement.
If america faced a strong recession of say 4 to 5 years, there would be blood flowing in the streets. America's savings rate is abysmal.
There are some valid arguments regarding house prices being high.
But the predictions and dire warnings regarding a housing crash are unfounded and perhaps extremely paranoid in nature.
I do not own a home and am probably one of those that would cheerlead the possibility for a housing crash, but that is NOT going to happen....
The bottomline is that people are lining up to get into America. As long as that desire remains, there is not going to be a housing crash! What we are seeing now is a welcome departure of flippers from the scene....
Honest people who bought homes with the intetnion of living in them have noting to fear....
Housing panic is beginning to sound a lot like the radical "Welcome to Armageddon" right-wing cheering crowd.
You guys have it all wrong. CC are great IF you carry no balance and ONLY buy want you really need. The CC company hates people like me, never a balance or late fee, but cash back and airline miles. Flying free for Xmas and making money off those jerks.
"Mendoman said...
You guys have it all wrong. CC are great IF you carry no balance and ONLY buy want you really need. The CC company hates people like me, never a balance or late fee, but cash back and airline miles. Flying free for Xmas and making money off those jerks."
Good for you Mendoman! I do the same except I don't fly. Just have to live with that low credit score that the CC company hate translates into. But what do we care, they DID give us the cards!
"The bottomline is that people are lining up to get into America. As long as that desire remains, there is not going to be a housing crash!"
Yeah and I am sure those people are ALL rolling in with a salary of 100k plus a year to afford the median price in California! Dickwad.
stock market overvalued, housing overvalued, too much debt, federal debt out of control, asian countries buying up America. Where did I hear all this before? Oh yeah the 80s except the big bad aisan country was Japan not Chinca.
Yeah we had a recession for a year and a housing downturn for 2-3 years. Then life went on. The S&P Anyone here wish they could go back to 1989 and buy a home at the peak of the market at a whopping $120K median price nationally? How abouut buying the S&P500 the day before the great crash in 1987 at the outrageous price of 300.
Yeah me too.
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