American Consumers Finally Begin to Think About Their Finances
These days it seems there is little disagreement that consumers are over-leveraged and over-consuming, yet few pundits, economists, or politicians are willing to accept the remedies obviously needed to solve the massive crisis. Our culture tells us we must spend everything we make, and then more, and not only keep up with the Joneses, but to kick their ass or go down in a sea of debt trying. Our media warns us about the sickness (to boost their ratings), but when it comes to time to take the medicine, they turn their heads and make excuses about why we shouldnt take it. Our politicians tell us we are in crisis (to stimulate an atmosphere of fear), yet they are unwilling to tell those in trouble that they need to bear a burden for their lack of prudence.
The “what” of the problem, over-leveraging, is clear. Even if the “why” or the “how” are still being debated, there is only one way to solve our over-leveraging problem: through painfully tightening our belts in the areas that were overextended. Unfortunately, it so happens that most all areas directly or indirectly controlled by the FED were overextended, including our corporations, our government, and our consumers. Put simply, our nation has built up too much fat and it needs to go on a serious, sustained, diet.
So who is the first to recognize this necessity?
Well of course it is not the government - they will never recognize it under the current political environment. That leaves corporations and consumers, both of which have recently looked at themselves in the mirror and found what they saw as unsustainable.
Corporations are changing their fiscal habits in order to stay alive, while individual consumers are changing their fiscal habbits in order to prepare for what 60% believe is an upcoming “depression”. For example in the month of September American consumers spent 1.2% less than they did a year ago on a nominal basis, and nearing a double digit drop if inflation is accounted for in this statistic.
It is the meager remains of freedom, which includes freedom to suceeed and fail, that is making the hard decisions that will lay the foundation for a future of more sustainable growth. Now if only the government had the guts to do the same.