The Wall Street Journal actually had the audacity to suggest that recently frugal Americans are somehow to blame for continuing economic decline. Apparently, what we really need to pull us out of this rut is increased spending, even by those who are only tenuously employed and probably one missed mortgage payment away from vagrancy. Surely those who are leveraged up to their asses in credit card debt are not doing their fair share to bring a swift turnaround to this deflationary period either. I normally enjoy the WSJ, but this article made me question just who's at the wheel and who was the editor that thought this was in any way newsworthy?
I'm not about to lay the blame for our problems anywhere but at the feet of the American people themselves. They've been greedy, selfish, myopic and generally sheltered and detached from the harsh realities that 3/4 of the world's population endures on a daily basis. We've been the undeserving benefactors of foreign largesse that permitted such privileged lifestyles--lifestyles that 90% of the world aspires to, but will certainly never come close to attaining. The ironic part is, the vast majority of the "unwashed masses", at least in my experience as something of world travler, are much happier and carefree than Americans, Europeans, Aussies, Canucks or Kiwis despite their "inferior" socio-economic status.
To be completely honest, I'm actually somewhat disappointed that Americans aren't suffering more and displaying a great deal more fear and concern over their precarious positions. We continue to delight in the banalities of our celluloid freakshow society, only occasionally glancing over our shoulders to see if we can derive pleasure in someone else's misfortune. But to blame a people who are finally waking up to the benefits of actually possessing a small cushion to soften the blow of such downturns is just ridiculous.
BOISE, Idaho -- Rick and Noreen Capp recently reduced their credit-card debt, opened a savings account and stopped taking their two children to restaurants. Jessica and Alan Muir have started buying children's clothes at steep markdowns, splitting bulk-food purchases with other families and gathering their firewood instead of buying it for $200 a cord.
Silly bastards. Why in the hell would you ever start paying down your credit card debt? With 23% APR, carrying thousands of dollars in balances is just smart money management? You folks just aren't doing your part. I'm sure your snot-nosed little brats deserve to eat pizza, burgers and lasagna 3 times a week. How the fuck will we ever emerge from this recession if you're not supporting your local Maccaroni Grill?
Usually, frugality is good for individuals and for the economy. Savings serve as a reservoir of capital that can be used to finance investment, which helps raise a nation's standard of living. But in a recession, increased saving -- or its flip side, decreased spending -- can exacerbate the economy's woes. It's what economists call the "paradox of thrift."
Right! What we need right now is some good old fashion irresponsible, profligate spending. Now get the fuck out there and buy your erstwhile spoiled clan iPhones with voice AND data plans so they can surf Facebook in homeroom. And the kids definitely have to have the latest Gears of War so they can simulate killing Nazis or whatever the fuck sort of indiscriminate killing such games promote. And for the misses--why not get her a 3 carat tennis bracelet that will strain the clasp when she snaps it shut around her corpulent wrist? Go ahead and get yourself that new set of Pings. Hey, it's for a good cause. Only you can save the economy.
Economists now expect the rate to rebound to 3% to 5%, or even higher, in 2009, among the sharpest reversals since World War II. Goldman Sachs last week predicted the 2009 saving rate could be as high as 6% to 10%.
THE HORROR!!!! Run for the hills, the Savers are coming! EEEEEEEEEK!!!
Spending now will only borrow from future production. The United States has been doing that for decades and all we have to show for it is an exodus of manufacturing jobs from the United States to China, and a housing bubble of epic proportion.
There is no paradox. The United States has borrowed itself into oblivion. Consumers have finally seen the light and are attempting to save in spite of horrible economic policy encouraging them to do otherwise. - Thanks, Mish!
