truth about the recession (don't blame umbrellas for floods)

[CheezeFlixz]

If you want a good example of how one person's savings can hurt others, consider how the low prices at, say, Wal-Mart are achieved on the backs of underpaid staff and cheap overseas manufacturing that, in turn, costs jobs at home. People pay less, but somebody else pays the balance.

Primary reason I haven't set foot in one in many years, I order, deal and buy from locals stores, I go in they know me and generally know what I'm there for and if I need something they don't have they'll get it for me.

This keeps money in the community, provides jobs to small business and aid the local economy and tax base over having my money end up in Bentonville, Arkansas before I car to the truck.

[lester1/2jr]

I'm pro wal mart.  the fact is, alot of people can't afford to go anywhere else.  they have pc's for like 300 dollars or something. 



andyc-  no one just saves their money forever.  I saw a thing on tv today about a guy who became a millionaire making 11 dollars an hour.  he made smart investments, didn't expect to go in and make a killing right away, and in the end I think he gave a million dollars each to two schools or something.



would we as a society, or even our economy,  be better off if he had just saved up for no more than a month at a time and bought TV's and Ipod's and stuff? 

saving and investment is bound to lead to higher quality spending

[trekgeezer]

I'd just like to say this about the recession/sub-prime market woes.

I'm not much of a consumer.  And I have modest savings.  I've never had trouble getting a job, no matter what the economy.  I believe saving money for a rainy day is an excellent idea and if more people lived within their means, there wouldn't be a need for a sub-prime housing market. 

It's just madness to give credit to those people who can't afford it.  Did the financial institutions really not see this coming?  If you can't afford a mortgage, charging people higher interest rates to make up for it won't make a lick of difference and just gets everyone into trouble.

I understand the  need for people to have their own homes.  But, for corn's sake, people, at least buy when you can afford it.  And if you can't, there's nothing wrong with renting.  The trouble is, when the US goes into recession, it affects the whole world.  Fortunately for us, our economy is quite strong so we shouldn't be affected too badly.  But it means everything will get more expensive.  And that extra money you pay for food or rent has to be found somewere.  I just feel sorry for those families who have to choose between paying the power bill and eating for the next week.

In this culture of gross materialism and instant gratification, it's no wonder so many people are in debt and struggling.  But responsibility for your situation starts with YOU.  The government isn't responsible for your smoking/gambling/crack/alcohol habit.  Nor is it responsible if you don't put aside a little money every week for your power bill when you choose to go out and buy a $500 handbag like Paris has.

A little more fiscal conservatism by the Mr and Mrs Average Joe would go a long way to making things better.  And the economy wouldn't suffer, because people will always buy stuff.  Hell, even I love my DVDs, books, CDs, cosmetics, hobbies.  But I don't pay for them at the expense of putting a roof over my head or food on the table for me and my son.

Here endeth the rant.

Very well said. Karma for you.

Karma from me too.  My family lived off my single paycheck until my kids were well into their teens because my wife chose to stay at home and raise our kids. We were successful because we live within our means and I was still able to put money into retirement.  I used to see people who I knew couldn't be making more than me, but they had lots of stuff we didn't but I wasn't  in hock up to my neck like they were. 

A side effect of this was that my kids know how to manage their money.

[nshumate]

I think Killer Bees' comment brings up a point that gets overlooked in conversations like this:  We're not just talking about spending, we're talking about debt and deficit spending.  We're not really talking about a sustainable economy if we're talking about spending our way to prosperity IF Joe Average is carrying his weight in consumer debt.  When we talk about "money has to go somewhere" in either consumption or investment, we're assuming a finite amount of buying power.  Easy credit "creates" the illusion of extra buying power, or more money in the system, but Americans singly and in the aggregate are racking up more debt than there is money to pay it.

So before we talking about the relative virtues of spending vs. saving/investment, we need to realize that we're talking about relatively small bracket of the middle class on down who "own" their own money.

[CheezeFlixz]

I'm pro wal mart.  the fact is, alot of people can't afford to go anywhere else.  they have pc's for like 300 dollars or something.

You can buy Dell refurbs for the same price, people don't shop around. Wal-Mart didn't get to have the riches family of billionaires ever by saving you money. They are geared to sell you tons of crap you don't need, we saved money by not going to Wal-Mart. But that's is another thread.

We're not just talking about spending, we're talking about debt and deficit spending.

Yes people should live within there means, trouble is many don't they'd rather go into debt than save and wait until they can pay cash for it. It's the ole "I want it now." mentality.

[BTM]

We have a 3 TRILLION dollar budget.  There's NOTHING we can cut  for the sake of our country?

Taxes and the size of government, but neither side seems willing to do that.  :(

[AndyC]

I'm pro wal mart.  the fact is, alot of people can't afford to go anywhere else.  they have pc's for like 300 dollars or something. 

andyc-  no one just saves their money forever.  I saw a thing on tv today about a guy who became a millionaire making 11 dollars an hour.  he made smart investments, didn't expect to go in and make a killing right away, and in the end I think he gave a million dollars each to two schools or something.

would we as a society, or even our economy,  be better off if he had just saved up for no more than a month at a time and bought TV's and Ipod's and stuff? 

saving and investment is bound to lead to higher quality spending

You're still talking in individual terms. One guy can save a lot of money, but the economy depends on the far-reaching effects of what many people do. And yes, some uses of money yield more benefits than others. However, buying consumer goods is not a complete waste either. Again, you're thinking individually. Buying an ipod is not necessarily a smart purchase for the individual, and only one person will benefit from its use. But the money spent will still find its way into the hands of the retailer who sold it to you, the company that shipped it, the wholesaler, the marketers, the manufacturer and the component manufacturers, right back to the people who produced the raw materials. And at all stages are people who will have the same choices with their money.

As for being pro-Wal Mart, that's pretty short-sighted. The original post mentions blaming an umbrella for rain. In this case, you're doing the opposite, giving credit to the cause of the problem. Many people can't afford to shop anywhere else. Why? Could it be because of large multinational corporations with overworked, underpaid employees, killing independent businesses with predatory pricing, selling cheap overseas merchandise and outsourcing many of their functions to whichever place is cheapest?

Somebody pays the balance. Quite a few of those people who can't afford to shop elsewhere are paying, I can tell you that.

Of course, economically speaking, I don't think the problem is so much whether people save or spend their money (investing is as good as spending), but when a lot of people suddenly change what they're doing with their money, such as cutting back their spending or selling off their stocks or not buying a house or car. Somebody else invested money to meet the anticipated demand, and they lose.

I read somewhere what would happen if everybody in North America decided not to spend any money for a single day. Billions would be lost from the economy. The original issue here is whether tight-fisted consumers can worsen a recession, and they most certainly can.

[lester1/2jr]

so do you think we should all go out and buy Ipods so there won't be a recession?

[CheezeFlixz]

Somebody pays the balance. Quite a few of those people who can't afford to shop elsewhere are paying, I can tell you that.

They can afford to shop else were they just choose not too, I've found many, many products cheaper at mom and pop shop. Wal-Mart as convinced nearly every one that they are cheaper with price point marketing (PPM). What's PPM? Wal-Mart buts a big pallet out of basic 'widgets' for some cheap rolling back the price. But the PPM product lacks the features you want, but your in luck they've surrounded it with higher end, higher priced products that have those features. BUT more often than not the surrounding product is higher priced than what you can get from some other store. So you've been a victim of marketing and you feel you've spent less and in fact you paid more.
But wait there's MORE!
They are also geared to impulse shopping and psychological marketing by giving you a HUGE cart so that it never looks full. They never use standardized pricing, 4.88, 7.76 etc. as opposed to 4.99, 7.95. Why it looks more like a wholesale price and it's not. Also the ROLLING BACK THE PRICES bit ... marketing, that NEW lower price is higher than it was the week before. Wal-Mart will take a product that it say, 6.89 jack it up to 9.88 and then lower it to 8.44 and put a big Rolling back the prices on it and in fact you are paying more. I won't even get into predatory pricing, depress local and national wages, they yet you the taxpayer get to subsidize their employees at the rate of roughly $420,750 a year for every 200-employee store by paying for low-income services. The list goes on and on and on ...
Ask yourself this, how often to you spend over a $100.00 on a trip there and wonder what the hell did you buy?

Just in case you are bored ...
http://www.intellectualpoison.com/WalMartisPureEvil.html
http://www.walmartmovie.com/
http://www.fastcompany.com/magazine/77/walmart.html

[lester1/2jr]

and for a counter view to brother cheezeflix

seriously, Target is "cool"?  is there minimum wage somehow less exploitative?

[AndyC]

so do you think we should all go out and buy Ipods so there won't be a recession?

How did you end up drawing that conclusion from anything I just said?

[Killer Bees]

Thanks to everyone who gave me karma.  You guys are great 

[lester1/2jr]

andy- I just don't agree with this idea that we should try and say to people don't save, or don't buy stuff for the cheapest you possibly can.  economiuc freedom means doing what you want.  I think people shoud do what they want!!

[CheezeFlixz]

andy- I just don't agree with this idea that we should try and say to people don't save, or don't buy stuff for the cheapest you possibly can.  economiuc freedom means doing what you want.  I think people shoud do what they want!!

You not seeing the forest for the trees, no one is saying don't save, no one is saying don't buy the cheapest. (If you think Wal-Mart is the cheapest, think again.) What is being said that to stop all personal spending which is impossible will kill the economy. As the song goes 'Money makes the world go around'.

[AndyC]

People can do what they want with their money. But they don't do it in isolation. It affects other people, and the combined effects influence the economy. Not making a value judgement, just explaining how it works.