A Glimmer of Hope

rpadula

rpadula

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For the first time ever reported, household debt shrank in the quarter that ended September 30th.

As of Sept. 30, households’ total outstanding debt shrank at an annualized rate of 0.8% from $13.94 trillion to $13.91 trillion, the Fed said in its quarterly flow of funds report. It’s the first decline in household debt ever recorded in the report.
Households paid off more mortgage debt than they took on for the first time on record. Mortgage debt fell at a 2.4% annual rate to $10.54 trillion.
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A good first step...
 
Actually, perhaps not. People are pulling back, starting to save, buying much less.

Our economy is based on consumerism. If people do not make purchases, more people will lose their jobs, and their homes. Those people will not be able to buy, even if they wanted to.

The more people out of work, the more people will be soon joining them. It's a vicious downward spiral, much like the great depression.

The government loaned the financial industry billions, in the hope that they would loosen up and start lending. They have not, they are afraid to let that cash go, it could mean their very survival.

That is the same way it is with most consumers, they are afraid to spend what cash they have because they know things are going to get worse, so they save it.

With people not spending on anything other than the bare necessities, we have no direction but down to go. Millions of companies that support retail sales, such as manufactures, suppliers, distributors, those who provide utilities, financial services, interior and exterior construction, and their suppliers and manufactures are all facing closure.

It is all tied together, at the retail cash register. If that stops kachinging, everything stops.

John
 
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I think it's more complicated. Having folks save a little more (but not stop spending altogether) is better in the long run.
 
John Baker said:
Actually, perhaps not. People are pulling back, starting to save, buying much less.

Our economy is based on consumerism. If people do not make purchases, more people will lose their jobs, and their homes. Those people will not be able to buy, even if they wanted to.

The more people out of work, the more people will be soon joining them. It's a vicious downward spiral, much like the great depression.

The government loaned the financial industry billions, in the hope that they would loosen up and start lending. They have not, they are afraid to let that cash go, it could mean their very survival.

That is the same way it is with most consumers, they are afraid to spend what cash they have because they know things are going to get worse, so they save it.

With people not spending on anything other than the bare necessities, we have no direction but down to go. Millions of companies that support retail sales, such as manufactures, suppliers, distributors, those who provide utilities, financial services, interior and exterior construction, and their suppliers and manufactures are all facing closure.

It is all tied together, at the retail cash register. If that stops kachinging, everything stops.

John
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Sadly, I'm generally inclined to agree... :frown2:

TMetzinger said:
I think it's more complicated. Having folks save a little more (but not stop spending altogether) is better in the long run.
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That's true. But if there's a somewhat acute flight to safety like that, right smack in the middle of a hefty crisis like this one... Ehh... :yikes:
 
John Baker said:
Our economy is based on consumerism. If people do not make purchases, more people will lose their jobs, and their homes. Those people will not be able to buy, even if they wanted to.
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We use to be a goods producing capitalistic economy and we flurished, lead the world in productivity, innovation, and marketing. Today, we are becoming a socialist consuming economy which is doomed to mediocrity and ulitmate failure.
 
As our economy deteriorates with employment doing the same, more and more people will be willing to work for much less per hour, just to have something coming in. In other words with wages coming down, soon it will be less expensive to make things right here at home. Domestic manufacturing will pick up, as will our economy. Unions will jump in and get wages back up, sending manufacturing out of the country again.

John
 
John Baker said:
As our economy deteriorates with employment doing the same, more and more people will be willing to work for much less per hour, just to have something coming in. In other words with wages coming down, soon it will be less expensive to make things right here at home. Domestic manufacturing will pick up, as will our economy. Unions will jump in and get wages back up, sending manufacturing out of the country again.

John
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Yep. Rinse and repeat, the business cycle at work. We just have to let it cycle, not artificially prop it up. That's why we're seeing negative interest rates on T-Bills. :yikes:
 
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