Saturday, January 19, 2008

Economic Needle Exchange

I've been quietly watching the sub-prime mortgage mess, and the subsequent hand-wringing from economists, bankers, and politicians.

So, correct me if I'm wrong, but here's my impression: Having burned through their own cash and available credit, American consumers are now looking to the federal government for money to continue spending.

I won't accuse anyone specific of being especially profligate (except perhaps myself), but it seems that the federal government's budgeting and spending problems are mirrored by the population at large.

With the sub-prime mortgage mess, we had two terrible proclivities coincide. Consumers tried to buy houses that they could barely afford, and/or were bigger or nicer than they needed. Banks tried to lend money to encourage the above behavior in hope of getting even more money than they were already making on more stable loans. Mr. Greed, this is Mr. Avarice. Mr. Avarice, Mr. Greed. Now that proper introductions have been made, let's start f#¢&ing things up.

Our currency has already been in decline, and doing a tax revenue handout to non-taxpaying spenders will not help. If the federal treasury sends out a $500 check to each household, it'll only be worth $450 by the time it gets cashed.

As an added insult to injury, most of what gets purchased with the kickback will be on foreign-made goods, which will only continue to widen trade gaps, and continue the hemorrhage of money from the country.

Unless the american consumer decides to live well within their means, and buy things made in this country, nothing we do will halt the decline. The same could be said for the federal government as well.

As for me, if a check shows up at my door, I'm turning around and putting it in gold or Euros.

1 comment:

Tiber Jumper said...

Consumers tried to buy houses that they could barely afford, and/or were bigger or nicer than they needed. Banks tried to lend money to encourage the above behavior in hope of getting even more money than they were already making on more stable loans.

Great point!
Sadly our economy runs on greed and
materialism! So when it starts to falter they prop it up with more.
Good post