Archive for the ‘Politics’ Category

Why I’m Cautious About Economics in 2010

Thursday, April 8th, 2010

It’s very simple:

  1. An economy can’t overcome hundreds of billions of dollars of debt in one year.
  2. An economy can’t recover in one year when “real” unemployment is over %10.

By “real” unemployment, I mean people who are capable of working and want to work for compensation or who are on any significant form of tax-backed support;  but excluding people who have sufficient non-tax-backed income-generation by other means to support their household (such as “trust fund babies”. I also put “homemaker” as “real” employment. It’s a job like any other, and strongly affects income (negatively or positively). If it weren’t, housekeepers, baby-sitters, pre-school, and day-care would all be non-profitable.

(That’s a complicated way of saying: Real unemployment takes into account only people willing and able to work. It excludes people who have their own means of self-support – like being independently wealthy, or owning your own gold mine.)

So far, our elected officials have done what I’ve expected:

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Predictions for 2010

Thursday, January 7th, 2010

Here are my predictions for 2010.

  • Stocks will go higher.
  • Stocks will go lower.
  • Employement will get worse.
  • Employment will get better.
  • There will be at least one more crisis – probably three.

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I Fired Chase

Wednesday, July 15th, 2009

I’m back from dealing with the various body blows life has thrown at us. I’ve even got a good example of how living life like Pookah allows you to deal with “problem” credit card companies.

I had two credit card accounts with Chase. So, Friday evening, I got a letter from Chase:

  • Dated 06/02/2009.
  • Closed a credit card account I hadn’t touched since 10/2007 (October last year).
  • Reasons given were items on my Experian credit report: failure to pay as agreed, and past due history on one or more accounts.
  • Listed a phone number to call if I had any questions – but with no office hours on the weekend.
  • Website still shows the account as open and usable.

Here were the red flags:

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Credit Card Companies Threaten To Be Mean

Saturday, May 23rd, 2009

In recent news, our federal legislature has passed bills restricting the bad behavior of a certain class of financial institution: The Credit Card Company. Under the new legislation (if signed into law), all credit card companies will have to follow certain rules and regulations. Not least of which:

* No More Universal Default. Previously, if you were late paying your water bill, the financial institutions could jack up all your credit card interest rates to 20%, 30%, or more.
* Interest rate increases are no longer retroactive. In other words, if they do increase your interest rate, they can do it only for new expenses, not back-date it to the amount that you’re paying down.
* Reasonable notification of increased interest rates for missing a payment – 45 days notice (depending on which story you listen to) – AND if you make a minimum payment in that time, the interest rate goes back down to normal.

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How To Prevent Your Own Financial Meltdown

Tuesday, May 19th, 2009

You’ve heard it before. I’ve got some good news… and some bad news…

The bad news is that there are certain types of disasters that you will never be adequately prepared for. Astroid strikes and nuclear wars are at the top of the list. Fortunately, those are “Outlier Situations” with a low likelihood of happening.

The good news is that it is relatively easy to prevent your own financial meltdown – a lesson that many financial institutions could have easily remembered, yet failed to.

The basic principles are:

1. Prepare.
2. Reserve.
3. Insure.
4. Conserve.
5. Review.

It’s all about managing risks.

1. Prepare.
Prepare for life’s emergencies. At some point, you (or a family member) are going to get sick, lose a job, need car repairs/replacement, purchase a home, need significant home repairs/replacement, need emergency shelter, or need legal assistance.

By Pookah Finances 201, you can start really thinking ahead. Your mind, along with your ability to plan ahead, is your most powerful asset when dealing with finances. Plan Ahead. Work through a list of “What If’s”. Learn about your family’s medical history. Check with your neighbors or the local city council for what past disasters have struck your neighborhood. Write down what you learn… and what you plan.

2. Reserve.

Set aside enough of your earnings to cover one or two of these emergencies, preferrably the expensive ones. You do NOT have to start out with the most expensive one (probably serious illness). But car replacement/repair is highly likely, as is home repair. Ten thousand dollars is a lot of money – build it up over time. Your emergency fund can act as this sort of reserve.

When it comes to investing, it depends on your level of interest. Index funds are a good choice, in general (though there can be great variability even among index funds). But don’t put every single egg in one basket. An IRA (Roth or Standard), 401K plan, and Emergency Fund are a good start. With a little planning (see 1. Prepare above), you can also take great advantage of a Health Savings Account (HSA) or other vehicle that allows you to reserve some of your money, probably earn interest on it, and then pay for some of those incidents when they crop up. If your interest lie in the direction of direct stock purchases, you can increase your reserves (with attendant market risks) steadily over the long run.

This is akin to keeping enough money in the bank to cover your borrowing – a concept that has direct bearing on the crisis our economy is currently experiencing. You have a (hopefully) rare opportunity to learn several important lessons and take them to heart. This is one of them.

3. Insure.
Insurance, in the United States, is screwed up. It is one of those necessary evils.

Insurance is intended to spread the cost of expensive problems and disasters over a wider population, using the premiums paid by the insured as investments to generate additional money for the insurance company AND to pay for those who file a claim to be repaid.

I do not have the space to go into details about the many, many, many problems and pitfalls of insurance here. But I do offer this advice: Insurance is there as an emergency measure, for when one of the disasters strikes. If your cash flow can handle it, use a high deductable to lower your insurance costs – and keep that emergency fund at three- to five times the deductable. With the exception of medical insurance, insurance is for the “What If’s” – those emergencies that are unusual and tend to be devastating in their effects. What if your house burns down? What if you are in a car accident? What if you are diagnosed with cancer? What if you are killed and your family needs to pay off the house mortgage?

Just one of these events can destroy your finances. Insurance is there to prevent that destruction.

4. Conserve.
Conserve your resources. You can look for ways to cut drains on your resources from the preceding principles. For example, if your emergency fund is at a reasonable $10,000 adjusted for your lifestyle, you can look for ways to cut your expenses. One of the easiest is with a car. If replacing your car with a like make & model would only cost $5,000, talk with your insurance provider about dropping vehicle replacement coverage from your car insurance. How much would it save you per month? Then put that savings towards your emergency fund, until you get it to $15,000+ (three to five times the replacement cost). You can also look at raising your deductible, increasing your emergency fund accordingly, and using the savings for other projects.

Medical insurance is a touchy subject. But if you are regularly on medication to treat a condition, it may be worth your while to seek out either a cure or alternative treatments. To use diabetes as an example, mild cases *may* be controllable solely through dietary changes. Not having to buy medication (insulin, in this case) all the time means that you can improve your cash flow. However, it is up to you to determine if the cost of the cure (or the attempt to get around) the problem is worth it.

You must also ACT CONSERVATIVELY. Are you taking on too much risk by raising your deductibles? What if you have to pay three or four of those deductibles in the same six month period? If your household only generates one bag of trash (because of your extra efforts at frugal living, for example), would it be worthwhile for you to join up with your neighbor and have a “joint trash pickup” service? What are the costs of your employer-provided insurance versus getting your own? (It does happen occasionally that paying for your own insurance is cheaper than accepting your workplace plan.) Ask your doctor if there is a generic or older equivalent of your prescription medication that would cost less, yet still work for you.

Above all, when you are changing something about your finances, THINK: How will this impact me? Does this create too great a risk? What will it cost if the emergency DOES happen?

5. Review.
Review your plans every year, especially the insurance. If you have picked up a few fender-benders or tickets (it happens even to the best of us), check your insurance to see if the monthly cost should have gone done by now. You may very well have gone the required one or two years (or whatever requirements are there for your situation)without an incident to qualify you for the reduced cost. Definitely insist on being pro-rated for any time that has passed before you noticed this cost savings! Or for the cost of a simple blood test, you may be able to demonstrate that you no longer suffer from an expensive, high-premium medical condition (thanks to your efforts to control or cure it), and thereby cut your medical insurance costs down.

This review also introduces a sanity check. After all, if you are at Pookah Finances 201, there is no reason to pay for insurance covering stretch limousine trips to and from the car dealership if you get in a wreck. A phone in combination with bicycle, public transportation, friend, or cab will do just fine. As a counter-point, if you are finding yourself more accident-prone as you get older, maybe you need to lower that deductible to better match your changing life.

I will never forget the neighbor who discovered he’d been paying for his eldest son’s medical insurance into the son’s thirties, when the insurance could no longer cover him once he passed his 21st birthday. (Like most insurance companies, they didn’t want to reimburse him for the overpayment. The state’s Attorney General, and a judge, vehemently disagreed.)

The Sky Is Falling

Thursday, April 9th, 2009

The mass media is full of doom and gloom. This isn’t your father’s country anymore. The economy is going worse than the Great Depression. The President’s stimulus plan is a dud. Those of us who handled our finances with care and consideration are watching the foolish get a free ride while our backs get whipped into a bloody, ragged mess.

Hogwash.

Uncontrolled greed has been, and always will be, the cause of major national and international problems. Lack of wisdom and due consideration has been, and always will be, the cause of economic meltdowns – big and small. When the economy goes through a periodic contraction – as it must to maintain its own health – inadequately prepared people will suffer and victims of accident will abound. In combination with any manner of man-made or natural disasters, these problems have been, and always will be, made much worse in effect and duration.

With any major spending spree by a government, it will take weeks – at a minimum, with an emergency expenditure – or even months for any real effect to occur. The President has been in office for less than three lousy months. Though we may very well expect our charismatic leadership to walk on water, he has adequately proven his humanity and must use a foot bridge like the rest of us. No doubt his feet are becoming very blistered and sore, just like ours. I say give our elected leaders time – not much, but a modest amount of 120 days – to start fixing it or start screwing it up.

I am only just beginning to parse through the stimulus plan. So far, there are parts that I heartily approve of. Along with parts that I am very suspicious of. Time will certainly tell whether this plan is well-made and well-executed, or ends up as another boondogle TARP give-away. However, I would like to challenge all the nay-sayers to cite, specifically and in detail, their complaints about this plan with complete references to the appropriate parts of the plan. This way we can have intelligent and at least semi-rational discussions, instead of endless rounds of “Democrats are going to spend us into oblivion; Republicans are giving truckloads of our savings to Corporates.” You were endowed by your Creator with a spine, two eyes, and sufficient neurons for cogitation. Use them, or stop distracting those of us who are actually trying to do something about the situation.

So, until the lines stretch around the block to buy a single loaf of bread, quit spitting into the wind about the Great Depression. You obviously have not read about it, looked at any pictures of it, reviewed even semi-biased statistics about it, or lived through it. Our leaders, whether you approve of them or not, are the ones making the decisions. They need more than a couple of months to do their jobs successfully, or fail miserably. I fully expect that we will experience both – successes and failures. It will be the degree of success or failure that dictates whether we have chosen wisely or foolishly. My limits are well-defined. There are numerous issues dear to my heart that I am willing to bend on, up to a point, to ensure that my fellow U.S. citizens (and even complete strangers in other parts of the world) are productively employed so they do not have heart strain worrying about how to feed, clothe, and shelter themselves and their families.

Either way, it is YOUR responsibility as a human being to prepare, as best you can, for either outcome: Success or Failure.

One important note: The next member of Congress who complains about not having enough time to read all one thousand plus pages of the plan must be expelled from office for criminal negligence, inexcusable laziness, and outright stupidity. You are paid rather well to read all one thousand plus bloody pages of what may well be the most important piece of legislation you ever touch in your career. Thank you, jackass, for signing a contract on our behalf without bothering to read it. May your constituency show their full appreciation for all your professional due diligence sooner rather than later.

Macro Economics – Encourage People To Save Part II

Thursday, March 26th, 2009

In Part I, I went over some very basics on how banks work, and ended with introducing inflation into the mix. The last questions I asked was: Now everybody’s hurting some, right?

Wrong.

Banks are for-profit businesses.

Banks have lots of smart number-crunchers working for them. They pick an interest rate that they charge for loaning out your money that allows them to not only fund their expenses, but also make a tidy profit and thereby increasing their purchasing and lending power in spite of inflation.

Savers aren’t quite so lucky. The savers’ purchasing power goes down if the saver leaves the money in the bank.

This leads to the bank’s greatest fear: Savers taking their money out of the bank all at once.

See, in our overly-simplified example, the bank has less than the $1000 plus savers’ interest available at any given time. (Remember, for this example, the bank wants to keep about 30% of the assets loaned out at all times so it can collect interest and fees on those loans to pay itself and then the savers.)

If 80% of the savers take their money out of the bank in one month, the bank is in trouble.

  • It doesn’t have enough money to give those savers *their* money back – like the bank is required to under the agreement with the saver.
  • It hasn’t saved enough of its own profits to make up the difference. The bank is now in debt – it owes money.
  • We call this “bankrupt”. The bank doesn’t have enough money to cover the debts.

(This is why banks tend to offer better rates on CD’s – they’re guaranteed to have the savers’ money to loan out for that period of time, and can use those assets to cover themselves better. It’s less risk for the bank, less risk for the saver.)

Bluntly, the banks want to pay savers (the asset providers) the absolute lowest possible return, and charge lenders (borrowers) the absolute highest possible fees. The monetary difference becomes the gross profit/loss for the bank.

Now comes the trick that short-sightedness misses: Banks need more savers to give them the new assets that they can then loan out and use to generate profit.

But banks and the Federal Reserve have been punishing savers by paying very low rates to savers for providing those assets. Those assets have declined in value due to inflation. A certain percentage of savers noticed this, and moved their money to greener pastures. This had the net effect of reducing the bank’s total pool of assets (influation plus losing savers).

(Yes, I know that there’s a LOT more to it than this. Please bear with me, and remember that my focus is on people like me – savers.)

With a smaller pool of assets relative to their loans, banks are harmed more by defaults on those loans, and by people losing confidence/trust in the financial safety of the bank. The net result is more and more savers start moving their savings out of the bank, the bank’s asset pool shrinks more, the risks increase for the bank, who charges higher interest on the loans, resulting in fewer borrowers providing profit to the bank, and makes it even harder to regain savers’ confidence/trust to give the bank more assets. When financial institutions started buying and selling “securities” (basically, selling loans as if they were stocks), they started going beyond their core business of money management and jumped headfirst into gambling: When the price of those securities drops below what a financial institution paid for them, the institution just lost some of its critical reserves — the savers’ money entrusted to their care.

So this boils down to one essential question:

Why would anyone keep their savings in a bank?

1. Safety. The FDIC insurance means that, if the bank goes under, the savers will get up to a certain amount of that money back courtesy of the United States Taxpayers (currently set at $250,000 maximum, though historically it’s set at $100,000 per institution).

2. Habit. Growing up, my generation was hammered with the “save it in a bank” mantra. Don’t think about why you would want to save it in a bank — just do it without asking any questions.

3. Inertia. Once a person makes a decision, especially a “safe” decision, we are loathe to change it.

People, savers, do eventually wise up and start moving their savings elsewhere to get better returns.

This, of course, makes lots of trouble for the banks.

Got all that?

Okay, now look at the reverse: What if savings earned a higher-than-inflation rate of return?

Then we have the opposite problem for the bank. The bank has to loan out assets at higher interest rates in order to cover costs (such as paying the savers that Inflation+ percent) and make a profit. Always remember that banks are for-profit businesses.

Since the cost of the loan is now so much higher than infaltion, fewer people/businesses will ask for loans — it’s better for them to become savers than borrowers. Now the bank has a harder time lending out money, makes less profit, and eventually can’t afford to pay its employees or savers.

The net result of this is that any savings account that earns a return too far below inflation is bad for both savers (due to inflation) and banks (due to the presence of higher-interest accounts that are closer to inflation level or higher). This result, however, is worse for savers.

The break-even point, savers getting the inflation rate, is constantly moving, and less profitable for the banks (businesses exist to maximize profits within the constraints of law and good sense. Banks are businesses.) Therefore, it seems to me that the best savings interest point is 2/3 to 3/4 of the last 10 years of average inflation. At this level, the assets provided by savers or profits from bank operations, aren’t deteriorating as much due to corrosive inflation. And the bank’s ability to generate profits (the bank’s main reason for existing in the first place) is still solid and reliable.

But I don’t think that banks, even the theoretical overly generous and conservative bank in our simple example, will raise their savings interest rates at their rock pile centers that high. It would cut too much into their profits (and reduce executive compensation by millions – a crime beyond imagining).

So for these reasons, I think savers should understand and do the following:

  1. Savings are not an asset because of inflation. As long as inflation is higher than the rate of return on your account, you are losing purchasing power. That’s a continuing expense.
  2. Use savings accounts only for short term goals (1-2 years at most) and as an emergency fund. There are better alternatives for both of those, but they require more effort on savers’ part.
  3. Put your savings in the highest interest account that you can, or ladder them as CDs that earn as close to or more than the inflation rate.
  4. Stop being just a consumer. If all you do is consume, you never produce anything of net worth.
  5. Stop being just a saver in mindset. You’ll never get ahead being just a saver.
  6. Start being a frugal investor in mindset (Pookah Finances 201 and 301).

Now, what should you take away from all this? Two basic things:

1. A better understanding about banks in relation to savers and our current (and developing) economic situation as a nation. Well-run banks are NOT your enemy; but they are not your ally either. They are in it for the money.

2. Motivation to take an active role in your own finances.

Macro Economics – Encourage People To Save Part I

Tuesday, March 24th, 2009

(Note: I actually started writing this post back in early December. I notice now that several talking heads on major news and “research” agencies are starting to think that banks keeping large amounts of savers’ money on hand, rather than shoveling it out the door in bad loans, might actually be a good idea. Be warned – this is a long post. Really long.)

Please consider the following information that I have gathered over the last ten years:

  • Basic economics: Money in exchange for goods or services.
  • The Federal Reserve, in cooperation with banks and other financial institutions, has been punishing savers for years. Just look at your savings account APY.
  • As a nation, our population is now referred to as “consumers”, even in casual conversation. Consumers don’t produce. They consume – resources, money, air, space.
  • The basic pile of rocks bank savings account doesn’t even keep up with inflation. In effect, savers lose money continually. Online banks, CDs, and the “very safe” vehicles often offer only a little better than inflation.

This is bad because those savers are the fundamental source of banking and investment assets. Yet those assets, those ultra-safe and reliable sources of money to loan out or invest, are constantly de-valued.

So banks (and other institutions) are fundamentally slitting their own throats.

Here’s why:

If you’re a bank with $1000 of savers’ money in your accounts, then you have $1000 that you can loan out. To encourage those savers to keep their money in your bank (so you can loan it out), you offer them %1 per year. That means that you add $10 to those savers’ accounts the first year, and compound it in the following years — effectively increasing the bank’s assets by the same amount each year.

Where does that $10 come from? Let’s keep this example very simple.

The bank lends a portion of that $1000 to other people or businesses, after checking to make sure the recipient is capable and willing to repay the loan plus interest. The bank conservatively sets a limit of lending out no more than %30 of its assets ($300 in this case) and charges %8 interest, for a gross profit of $24.

If the bank is destroyed, the FDIC will reimburse the savers. Nice and safe.

If the loan doesn’t get repaid, the bank covers itself by a) requiring some up-front payment, say %10 of the loan; b) seizing the property/business goods for itself and auctioning them off; or c) pursuing other legal means to recover the money plus expenses.

Still pretty safe so far.

So what we have is this:

Assets                                       Debits
Year 1    $1000 savers’ deposit        -$270 loan
$30 up-front for loans        -$10 savers’ payment
$20 loan interest                  -$10 business expenses
=========================================
$1084.02                                -$290

Assets                                           Debits
Year 2    $1084.02 savers’ deposit    -$240 loan
$30 loan repayment             -$10 savers’ payment
$19.20 loan interest              -$10 business expenses

==========================================

$1133.22                                    -$260

etc…

Until Year 10

With me so far? Everybody is making a tidy profit, right? Now, let’s add in the effects of inflation. We’ll assume %3 inflation per year, as a penalty, because everyone’s purchasing power has gone down (your money buys less food).

Now everybody’s hurting some, right?

Wrong.

And you’ll find out why in Part II.

Do You Own Your Home?

Thursday, March 12th, 2009

Do you have a copy of the original questionaire you filled out for each of the credit cards available for easy review?

(If not, shame on you!!! Get one! Now! In the meantime, check out one of the online offers or a recent snail mail spam you received.)

Do you see where it says, Do you Rent or Own your home?

Here’s one of the tricks that got us, collectively, in trouble during the housing boom and bust.

If you have a mortgage, you do not own your home. The bank does.

The amount of equity you have built up in your home is a percentage of ownership. Until that mortgage is paid off, in full, you only own a percentage of your home. The bank holds the deed and title to the property until then.

See, by asking you an either-or question, the lender (in this case, a credit card company) is tricking you into thinking, “Hey, I’ve got a mortgage, that means I own my home!” It’s a crock.

It is very simple: If you have a mortgage, you do NOT own your home. Any offer of credit based on you owning your home is therefore a trap… UNTIL you really do own your home.

(Yes, I know that revolving debt – like credit cards – can’t normally cost you your home if you default. However, home ownership makes you a good risk, in the credit card company’s eyes, for consumer credit. Regular, on-time, mortgage payments also make you a good risk – though not as good as home ownership – for consumer credit. It seems that the credit card companies forgot this difference, along with a significant portion of U.S. citizens.)

Now, consider the recent credit, mortgage, financial crisis. Credit was given to many people (including me) on the basis that having a mortgage = owning a home. If you own your home, you have an asset of real value. If you have a mortgage, you have a debt.

Here is one instance where Pookah was definitely smarter than I am.

Pookah thought she had a home once. Pookah lost her home. Pookah survived, but fully understands that Pookah depends on her human for comfy-nest and Pookahfood. A small tasty bird would also be nice. Pookah will now purr and entertain human with cat antics.

This is my train of thought (again, overly simplified):

1. Treat a mortgage as home ownership.

2. Offer people credit based on false home ownership.

3. Encourage people to use the credit, which they do.

4. People now have a moderate credit card bill every month IN ADDITION to a moderate mortgage bill. At this point, everything’s okay until…

5. A mistake happens – late on a payment – or life intervenes with an expensive medical or car problem; OR the continuous encouragement to buy on credit turns that moderate credit card bill into a High credit card bill.

6. People default on their payments.

7. The effect cascades as soon as enough defaults start racking up.

8. When enough people have defaulted, the credit card company’s gross income shrinks to the point where they can’t generate enough profit to pay *their* bills.

9. The credit card company can’t get any loans because the same thing is happening to other financial institutions.

10. The credit card company defaults on its loans.

11. All heck breaks loose.

Here is a case where an ounce or two of prevention are worth several metric tonnes of cure.

  • Any credit card offer that doesn’t ask about your mortgage is a trap. Don’t step in any more traps.
  • If you are already in debt, think twice – no, three times – before getting a new credit card. Borrowing more money will NOT get you out of debt.
  • If you are in debt, the only sort of credit card you should even consider is a 0% balance transfer card with a maximum 3% transfer fee. If the offer does not meet these minimums, shred it.
  • If you have any authorized users on your credit cards, cut them off. Seriously. You’ll have enough problems dealing with your own mistakes without having someone else’s mistakes bite your tail. If your kids are authorized users, it’s time to cut the financial umbilical cord. If your S.O., best friend, or business partner are authorized users, it’s time for them to be responsible for themselves. This does NOT mean that you cut your S.O. off. It does mean that you MUST contain the damage before it gets worse.

Why Some Economists Are Morons – On FoxNews

Thursday, February 5th, 2009

Article at Fox News: Frugal Americans Hurt The Economy

The article summarizes nicely in this line: “Economists call it the ‘paradox of thrift.’ What’s good for individuals — spending less, saving more — is bad for the economy when everyone does it.”

Hogwash.

Pure bull waste has more value than this reactionary garbage.

Saving more money — putting money into banks, stocks, and other financial vehicles — is a bad thing? So tell me, “Economists”, where do banks get their money to loan out to people? Do they just print it up in the basement? Do they beg for a taxpayer-funded bailout (and beg the question, where do taxpayers or the government get the money for that bailout)? Or do they get it from people who increase their savings?

Idiots.

Let’s try reworking this theory:

“Economists call it the ‘paradox of thrift.’ When the economy tanks and people lose around %50 of their investment and savings value, they wise up — spending less, saving more — so that their homes aren’t foreclosed on. This causes the market to contract sharply for the short term. But the long term benefits are a more stable and growing economy since individuals and financial institutions will have more assets available to them for extending and maintaining credit.”

Imagine this counter-point:
What if %30 of American taxpayers saved %10 of their income in a bank, money market fund, or investment service – towards a down payment on a house, towards a car to buy in the future, towards a flat-screen plasma TV, whatever? What if they did that steadily for 10 years instead of borrowing on credit for ten years? (Does this pattern remind you of the opposite of what’s been going on for the last decade? If yes, give yourself a kitty treat. Just don’t tell Pookah.) What would the total assets available in banks and other financial institutions be now? Wouldn’t American taxpayers (y’know, “consumers”) be able to still buy products sold in this country? Don’t you think that would have cushioned the hit caused by this recession? Did the reporter even bother to ask these obvious questions?

Reality check, Fox: The “economy” is still correcting. That “consumer debt” still has to be paid, or the consumer loses his/her purchasing power and critical assets – like a home. With employers performing credit checks to weed out prospective employees, the “consumer” has NO CHOICE but to go sane: Act more frugal, save more money, and pay off debts. Of course people are turning towards saving more – en masse – now. Just like they turned to spending more – en masse – back in the late 90’s. It is a logical and reasonable reaction.

There is no paradox here. There is only cause and effect.

Methinks someone was hunting for a sellable article, loaded with “controversy” and “spice”.

Maybe they’ll send someone under cover into the economy to find out what’s really happening. Y’know, all secret agent and stuff. Or maybe run a critique or counter-point to the article, and link it in so that the “reporting” isn’t one-sided. That used to be a reporter’s job.

(Was that enough contempt?)

Yes. Now, what was that about a kitty treat?

Whups.