Savings and Moan

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Good ole days: Awww yes I recall the good ole days of easy credit. You could buy a car, boat or any other toy with a second on the home. Consumers overspent on credit cards due to easy money. Now the housing market tanked ,credit has tighten and the card companies are cranking up the interest rates to cover the wave of losses. Even folks with good credit have a hard time getting loans. I have never bought a new car/truck knowing your at a loss when you leave the dealer and always bought a car/truck made in the USA. At least when it breaks down I can find a new part here rather than wait for a new one from overseas. My wife and I stopped shopping at Wal-Mart since most of the products sold are from China. I WILL NOT BUY ANYTHING FROM CHINA....and yes I do have to look hard for products made in the USA. Thank You Al Gore for NAFTA it really helped the US people go broke with our jobs going overseas.

Regarding the comments about the average taxpayer getting a bailout, just think about it this way: For decades, we have been consuming more government services than what we have been paying for in taxes, thereby increasing the national debt by leaps and bounds. Now government expenditures will be going up at an even faster rate. So the average taxpayer HAS been getting a bailout in the form of more government services, at the expense of future generations. Now he may say that he does not immediately benefit from those services, which is likely true, but it's nevertheless true that those additional government expenditures are cushioning the recession. I don't believe that a problem caused by too much debt cannot be cured by taking on even more debt. The problem with our government???s use of Keynesian economics is that through good times and bad, government deficits have been high. Keynesian economics says that in good times, the government should be running a surplus. Concerning private debt and the idea that people who got themselves into trouble with home purchases should now have their mortgage balances reduced, that's folly. The lenders can and should lighten the credit terms (e.g., by stretching out payments), but don't asked the government (meaning the taxpayers) to subsidize stupidity and greed.

Question,US credit card debt stands at 800 billion dollars,the same as the proposed bank bailout.
Keynesian economic theory says that when in a recession government,business and consumers can spend their way out of it if they spend enough to get the economy moving again.
What would happen if the US treasury paid off the Credit card debt of americans in the middle and lower income groups so that they would have more money on hand that would normally be put to servicing credit card debt.Might this not also encourage spending among a very large group of people and also pass the money on to those lending institutions that are holding the credit card debt anyway so the banks will receive a large immediate cash infusion.
Perhaps tax payer dollars are better spent bailing out the taxpayers that are the real drivers of the US economy and not for banks to hoard or buy out ailing rivals.

The problem is that our entire economy, for the last two decades, has been built on a bubble of consumer spending . So long as people were willing and able to run a line of credit off their homes and continue adding to their collection of plastic everything was "wonderful". Now it's time to pay the piper. The problem isn't that people are now spending less and actually saving a little (if only out of fear), but that a recovery is being defined as starting the cycle all over again! Have we learned nothing? Our needs as humans haven't changed from Day 1 - food, clothing and shelter, but our "wants" have become almost insatiable. THE fundamental flaw is that our entire ecomony has become predicated on endless consumer spending and investors looking for 15% - 20% annual returns. Home builders and auto makers were overcome by greed and built more houses and vehicles than the market could absorb - unless, of course, they could tap a new pool of potential buyers; people with mediocre credit scores. If the banks hadn't also bought into this, those industries would have taken the hit themselves and severely contracted as per the laws of capitalism and this may have been the end of it. The bitter reality is that neither ever escalating consumer spending or double-digit rates of return on investments was / is ever sustainable. We produce / manufacture less and less as a country each year, but have supported other growing economies by spending on their goods like there was no tomorrow. Tomorrow has finally arrived. If it wasn't the housing bubble, created by the greedy lenders and stupid borrowers, leading to our current bleak circumstances, it was only a matter of time before something else related to the ease and over-availability of credit did us in. If our government isn't careful, it may be coming to join us.

We aren't going to get out of the recession very fast by expecting the consumer to take on even more debt with rising unemployment. ******************
Old senile 72 year old John McCain offered to help the home owners,
He wanted to help bail out the home owners.

The economists and the MSM said he was an old fool.

Now, Bambi is gonna give those home owners a tax break.
How much is the tax break/cuts for a home owner that doesn't have a job?

Tax cuts are for the rich,
And those that have jobs.

Welcome to 25% unemployment and millions of tent dwellers.

TIME FOR BEHAVIOR MODIFICATION

MYTHS OF DEBT

Behavior modification requires acknowledging past mistakes.

What did we do for twenty years?
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http://pacificgatepost.blogspot.com/2009/01/myths-of-debt-to-be-corrected-for-2009.html
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Now let???s get on with the correction.

I don't know about you folks out there but I see the stock market bottom at 2,500 or less...I bailed out of the market a year ago.

Question,US credit card debt stands at 800 billion dollars,the same as the proposed bank bailout.
Keynesian economic theory says that when in a recession government,business and consumers can spend their way out of it if they spend enough to get the economy moving again.
What would happen if the US treasury paid off the Credit card debt of americans in the middle and lower income groups so that they would have more money on hand that would normally be put to servicing credit card debt.Might this not also encourage spending among a very large group of people and also pass the money on to those lending institutions that are holding the credit card debt anyway so the banks will receive a large immediate cash infusion.
Perhaps tax payer dollars are better spent bailing out the taxpayers that are the real drivers of the US economy and not for banks to hoard or buy out ailing rivals.

This is a good article which quite accurately and in rather simple terms describes our economy's predicament at the present time. It's also quite pleasant to see that the author refrains from calling on us American Citizens and residents to spend every last penny available either in our savings or credit lines remaining in order to jump start the economy on the right path toward recovery. While that type of an activity would be beneficial in its short term benefits from such collective action of ours, it still would not remedy long term non sustainable trends and structural problems where so many developing foreign economies rely on the United States consumption level either being sustained in their worst case scenario or growing annually in order to grow theirs instead of more reliance on their own internal and regional markets. I think in addition to this recession and financial sector problems many Americans genuinely and gradually become tired of mindless consumption with borrowed money rather than their own funds. Please don't misunderstand me. It's truly wonderful to be able to afford the acquisition of countless goods and services easily and readily available in the United States. After all consumption is the cornerstone of our capitalism and the reward for either one's labor or willingness to accept the risk and lend or invest money into those who don't have enough financial resources of their own. The problem is that many people in order to purchase various comfort items which in America are considered "necessities" much more frequently than they actually are in reality don't have enough income to afford and resort to debt as the "solution" to the lack of enough money saved or sufficient income.

There is a point where each individual must determine when it's best for his or her financial prosperity to scale back or stop borrowing money in order to buy various in many cases "discretionary" instead of truly necessary items and that's exactly what many of our people were doing. If it's best for YOU as an individual to save then you do it and if you have the money and want to spend it then it's great to be in that category of Americans. It's entirely up to each one of us to decide when to spend or not spend our own money or avoid borrowing even when it's available to us. It's the fact of life that to economy realities human being adjust either voluntary or are forced to do it due to circumstances. Neither home ownership nor an opportunity to have access to low or even high interest credit available for just about everyone are guaranteed perpetually in the US. Poor underwriting standards and lack of due diligence is partially responsible for this recession.

And by the way:
Newsweek and all the other MSM outlets who've been tools and shills for deregulation:

There are many people with the money to take out loans, etc...but some of us have learned our lesson and refuse to get involved in market THAT LACKS GOOD REGULATION.

WTF?????
If wages had kept up pace with costs and jobs hadn't been sent overseas, we'd have a balanced economy where people made enough to save AND spend.
It shouldn't be either or and THAT IS the problem.

I would have to agree this article is a farce, like so many others in Newsweak. All my savings are in money market funds. Bank rates have always been a joke. Another issue missed by the writer, whether on purpose or not, is what happens at many layoffs; you get a pink slip, a cardboard box, and perhaps some money. That money is going into a bank checking account because the same people who got those checks also starting getting a COBRA or other health insurance bill. Oh, they have savings for the moment, but they won't last long. Let's examine the savings rates six months after the layoffs cease, then we will know if there really is a savings rate or if it is just a flash in the pan.

More credit is such a joke. How many unemployed buy big ticket items that do not absolutely need? Of the 570,000 who lost their job in November how many of them are looking at new cars, even with zero percent financing? More likely they are worried where the health insurance payment will come from six months from now, especially if the person has children.

Meanwhile the banks don't even have to disclose what they are doing with the bailout money. Who decided that was a fair and equitable stance? How much more of this before the people realize we live in a corporate-ocracy? It's bad enough politicians are in the pockets of the lobbyists, now they behave as if they actually work for those same companies. Since this country was started with the appeal "no taxation without representation" it seems US citizens no longer have to pay taxes. Nobody in Washington represents "We The People" anymore.

Check out a refreshing and uncensored review of what is the general causes of economic situations are and how a nation should cope with them. http://commoncentsdg.blogspot.com/. Riveting, intelligent and accurate.

IMO, this whole savings concept is all in how one looks at the picture. Years ago, people had PENSIONS.
They did not have to contribute money to them in order to be assured that they could actually retire one day and also eat. Consequently, any additional money they had could be put into "savings".

Ever since most pensions went the way of the dinosaurs, people had to then put any left over income into their 401K's/IRA's. In addition, also unlike years ago, many more people invest...be it in mutual funds, stock etc. So, in reality, people WERE saving, just not in the old outdated form of a low interest bearing "savings account".

That established, people have already raided their "savings" 401K's, mutual funds, etc in order to pay the mortgage and eat, all due to the economic crisis. However, that was and clearly is not enough as the finance community keeps hoarding the billions (or spending it on ill deserved bonuses, acquisitions etc.) that was handed to them in order to grease the economy.

That said, lets deal with the reality here. Those who got us into this mess to begin with due to unbridled greed, fraud and deception are the same entities hindering a recovery. They are not keeping their end of the supposed, but unwritten bargain.

Force them to start releasing the money for what it was intended for, and the economy has a chance to get jump started.

Rely on the consumers, who are footing the bill for the bailouts, but who have received NOTHING in terms of help, and who are totally tapped out, is stupidity in its purest form. Even the bill passed to require the credit card companies to cease much of their loan shark tactics won't take effect until 2010. Why not NOW when the extra money that would be in the consumers pocket once the predatory practices cease could go into the economy?

Also, why not re-instate the deduction for cc interest which would also put more money into the consumer???s pocket?


The consumer was financially raped by the world of finance and the world of finance is being permitted to continue the abuse. Until some entity has the you-know-what???s to crack down on the crooks, we will be mired in this mess to some degree or another for many, many, many years to come.

You say people were supposed to save money in addition to the 401K, and peter's contention is that they do, it just gets done through investments which aren't being included in this savings rate calculation. I see absolutely no point in keeping more than a couple thousand dollars in a savings or checking account as an "emergency cash fund."

This article is not about going into debt, it's about people's willingness to store money in banks, which isn't the smartest investment for the majority of Americans.