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This crisis has been going on for over a year, but its now just starting to effect the average person. Its not like during financial meltdowns that people wake up one day and have no money. The economy will slowly spiral downwards over many months. Unemployment is now 6.1 and raising.
Anyhow, the reason spending is down is because things like Mortgage equity withdraw are down dramatically. In fact mortgage equity withdraw is almost zero now, lines of credit are being cut whether they are credit cards or home equity lines etc. Too many people have been increasing their lifestyle on credit and now that the lines are no longer available (this has been happening over the last year) they have to not only reduce their spending to what they make, they have to reduce it to what they make minus what it costs to service their previous debt.
We are going to at the very least have a major recession regardless of what is said on the media.
i agree with that assessment. you forgot to add that these spending sprees did not correlate with any actual income increase. now some of these people who engaged in spending sprees may be seeing their jobs potentially cut or eliminated. couple that with the price of the ridiculous taxpayer funded bailout, where the taxpayers have to pay market value to bail out the banks, (reducing their incentive to negotiate and take losses) and you have a situation that is going to take some time to resolve.
I went to dinner tonight, had to wait for a table at a restaurant where that's not the norm. Then I went to see Quarantine... there were lines, no parking, everyone carrying $5 popcorn and $4 bottles of water.
What are these people thinking? They should be planting their gardens so they can survive!
Apparently discretionary income is not yet a problem! This was not in an affluent part of town.
You don't know that. All you saw was people at the movies.
Quote:
Originally Posted by dmarie123
I'm sure spending is down, but probably because people are panicking and not because they are actually out of money.
I doubt that people, in general, are panicking either. Most people still have jobs & the stock market meltdown doesn't affect the entire population.
Quote:
Originally Posted by dmarie123
If everyone would stop panicking and spend as usual this would probably not be reflected so badly in the markets. If you tell me to horde my money, and I do, then someone is going to say, "OMG- She's hording her money! We better do it too!" and then people wonder, "Why is spending down?"
Hoarding? I've always known it to be called saving. As in saving it for a rainy day. You know, the kind of rainy day when you're told that your car needs major repairs or that your roof needs to be replaced or that insurance won't cover all of your medical bills. Most people don't save any of their income. It goes right back out the door to pay off bills & other assorted debt.
Most people in this country believe that they should have everything they want right now whether they can afford it or not. Everything is bought on credit. Have you ever missed a payment on a credit card or paid on a balance & been late? I think the maximum that a credit card company can raise your interest rate is 30%.
Quote:
Originally Posted by dmarie123
"Why is spending down?"
Its down because people are starting to wake up & realize that they may lose their jobs in the future & that they don't have any savings to fall back on. They watch the tv or listen to the radio & realize that their 401ks are worthless & that they'll be working for the rest of their lives. They realize that they won't be getting a pay raise or a yearly bonus that they had counted on to pay off a bill, & now they're scrambling to make ends meet.
Most people aren't going to think ahead about their survival or how they're going to get food because they have an erroneous belief that the government will step in & make everything better. They'll stand in line for their bailout just like the other folks that have been getting bailed out for years.
I went to dinner tonight, had to wait for a table at a restaurant where that's not the norm. Then I went to see Quarantine... there were lines, no parking, everyone carring $5 popcorn and $4 bottles of water.
What are these people thinking? They should be planting their gardens so they can survive!
Apparently discretionary income is not yet a problem! This was not in an affluent part of town.
I'm sure spending is down, but probably because people are panicing and not because they are actualy out of money.
If everyone would stop panicing and spend as usual this would probably not be reflected so badly in the markets. If you tell me to horde my money, and I do, then someone is going to say, "OMG- She's hording her money! We better do it too!" and then people wonder, "Why is spending down?"
DUH
I hope people are not just reading forums to get their " real news ".
Try this news link:
I have had enough of the panic and blame game and so I have cut down
reading what the so-called " experts" ( which aren't anymore " expert" then I am, LOL ) and seeking out sources of the real experts. I suggest that those in panic or blame mode do likewise.
I went to dinner tonight, had to wait for a table at a restaurant where that's not the norm. Then I went to see Quarantine... there were lines, no parking, everyone carring $5 popcorn and $4 bottles of water.
What are these people thinking? They should be planting their gardens so they can survive!
Apparently discretionary income is not yet a problem! This was not in an affluent part of town.
I'm sure spending is down, but probably because people are panicing and not because they are actualy out of money.
If everyone would stop panicing and spend as usual this would probably not be reflected so badly in the markets. If you tell me to horde my money, and I do, then someone is going to say, "OMG- She's hording her money! We better do it too!" and then people wonder, "Why is spending down?"
DUH
You said it yourself........."YET" .........the impact of what has happened and is taking place has yet to hit us. It takes a little time. Mass-layoffs will hit us all VERY soon. 30 states are expected to need bailouts to keep their governments running. Give it time, unemployment of 15% plus and inflation of 12-18% is coming!
Crap is not happening to me or my hubby or my folks or my bro and SIL (though my folks 401K w/Intel is terrible). Mom was going to retire beginning of next year (dad is) as they had 1/2 a mil in the 401K and thus far as of Thursday night they lost 120K. they refused to look at it friday morning after the crash.
My brother isn't bothered by what is going on because they are in their bubble. It's not affecting them right now. Bro and SIL also work for Intel and make 200K+ so they are all fine and dandy. Me and the hubby are doign fine as well. Jobs are here, money saved, bills can be paid etc.
BUT we are still pissed and worried about what is going to happen. Just because it's not happening to us (yet or if even) doesn't make it true. THere are many other people this is affecting and how can you not feel for them and what our government has done to us. Use a little compassion.
Ron Paul/Chuck Baldwin 2008 ... or....... Rand Paul 2012!!!
Location: Sitting on a bar stool. Guinness in hand.
4,428 posts, read 6,508,655 times
Reputation: 1721
Quote:
Originally Posted by Humanoid
This crisis has been going on for over a year, but its now just starting to effect the average person. Its not like during financial meltdowns that people wake up one day and have no money. The economy will slowly spiral downwards over many months. Unemployment is now 6.1 and raising.
Anyhow, the reason spending is down is because things like Mortgage equity withdraw are down dramatically. In fact mortgage equity withdraw is almost zero now, lines of credit are being cut whether they are credit cards or home equity lines etc. Too many people have been increasing their lifestyle on credit and now that the lines are no longer available (this has been happening over the last year) they have to not only reduce their spending to what they make, they have to reduce it to what they make minus what it costs to service their previous debt.
We are going to at the very least have a major recession regardless of what is said on the media.
On point.
This all started August 2007. But not to many people actually took the situation very seriously. If I remember correctly a year ago Paulson was saying the housing/credit crisis was contained and would not spread to the greater economy. What a difference a year makes.
As for people going out for entertainment purposes. You know what's funny....I expect to see more and more people spending money for entertaining themselves in various way. This is because I think people are going to looks for an escape from reality as often as possible.
I'm considering buying shares in netflix after considering this.
I have had enough of the panic and blame game and so I have cut down
reading what the so-called " experts" ( which aren't anymore " expert" then I am, LOL ) and seeking out sources of the real experts. I suggest that those in panic or blame mode do likewise.
This articel asks a good question. Is the U.S. taxpayer losing $700 billion?
lets see...
1. NOBODY ON EARTH wants these (still overpriced) assets that are "considered" depressed in value... because they are such a great deal and will make anyone who invests too much money.
2. Being that these assets are such great money makers and the rest of the free world won't touch them with their lives, the Gov/taxpayer will purchase these assets "at MORE THAN their current depressed value" ... You know, because the current value is too low...
3. The Gov will sell these over valued, oops, I'm sorry... meant depressed... assets at a profit in the future to private investors.
To answer the articles first question, I'd say NO the tax payer isn't loosing $700 billion... I'd say only about $550 billion of the $700 billion (subject to increase) when all said and done ! Those depressed assets carry "some" value...
Only in the USA !!! No wonder we're the greatest country in the world. One couldn't get away with this debacle in any other.
Stephan_K, the Fed changed their minds on the bailout money. They said today they will use it to buy interests in the banks themselves.
NorthJersey.com: U.S. government to buy equity in banks (http://www.northjersey.com/business/US_government_to_buy_equity_in_banks.html - broken link)
snippet:
"The administration received the authority to take such direct action in the $700 billion economic rescue bill that Congress passed and President Bush signed last week"
Remember..Paulsen got a blank check to do what he wants with that money. He sure didn't take long to change his mind.
I went to dinner tonight, had to wait for a table at a restaurant where that's not the norm. Then I went to see Quarantine... there were lines, no parking, everyone carring $5 popcorn and $4 bottles of water.
What are these people thinking? They should be planting their gardens so they can survive!
Apparently discretionary income is not yet a problem! This was not in an affluent part of town.
I'm sure spending is down, but probably because people are panicing and not because they are actualy out of money.
If everyone would stop panicing and spend as usual this would probably not be reflected so badly in the markets. If you tell me to horde my money, and I do, then someone is going to say, "OMG- She's hording her money! We better do it too!" and then people wonder, "Why is spending down?"
DUH
Just keep telling yourself that. This crisis is not an over reaction. We have serious fundamental problems that are not going to just go away.
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You know, the kind of rainy day when you're told that your car needs major repairs or that your roof needs to be replaced or that insurance won't cover all of your medical bills. Most people don't save any of their income. It goes right back out the door to pay off bills & other assorted debt.
