This is the most amazing newspaper report I have ever read.
People on unemployment benefits, single mothers with children, and soon-to-be-unemployed people working in construction stating that they are keeping their Christmas shopping expenditures down - they are even shopping? Another volunteers, “I don’t usually save, so this year is different,” as she buys an iPod. “He really wants one thing.” WT*? She needs to say, “We do not have the money and you can’t have it!” Another’s husband is in construction and doesn’t get enough work, and she is spending $1,000 - this is called “saving?” And Obama is promising to give these people a bailout?
The proper analogy for the situation is the following. Category 10 hurricane winds are already uprooting trees, the swells are breaking over weakening sea walls, while these folks are heading down to the beach for a last stroll and they expect to be bailed out? There will be no freaking money left as Paulson, Bernanke empty the Treasury for the final heist, even as Obama is bringing back the previous gang. The world economy is being tag-teamed by idiot savants blinded by the failed mainstream economics.
For the last two years, as Rich can attest, I have been telling people to hunker down, unload real estate, equities, and be in cash. I remember sitting on airplanes and telling people this. And they answered to me, “You are a pessimist, I’m an optimist!” I remember walking around a lake in August 2008 with a friend of mine affiliated with a very large conglomerate. I gave my typical better hunker down a “bad moon’s on the rise” speech. And he said, you are overly pessimistic etc. In October, his firm got the equivalent of a multi-hundred million dollar margin call. Now he won’t speak with me - probably because I have put my investment dollars where my mouth is.
The suffering that Cassandra went through. In earlier times, an “optimist” was not a synonym for a “fool.” Optimism is associated with realism - not deliberate ignorance. Sometimes people can’t hear or feel the wind even as it is tearing at the clothes on their back.
I only hope I am wrong and the people buying on “Black Friday” are right. If they are wrong and I am right, their children will have iPods but be relegated to homeless shelters. This searing experience will never let them forget how thoughtless their “optimistic” parents were.
Am I wrong?
Tags: bailout, Black Friday
December 1st, 2008 at 12:59 am
According to current economic theory, those folks deserve to be bailed out. They are doing exactly what the economists want us all to do: “Spend!”
Perhaps it is time to appoint Sheikh Saud Al Thani to the Board of Economic Advisers. He was once the world’s biggest spender (before he landed in jail).
December 1st, 2008 at 9:24 am
Your advice is good — if the majority do not follow it.
If everyone spent nothing and tried to liquidate anything they good to stuff cash in their mattress, most banks would fail, along with most retailers — the great depression would be back.
December 1st, 2008 at 12:57 pm
I agree with you generally although I question the safeness of cash as I wonder if a myriad of bailout plans will have a negative effect on the value of cash.
December 1st, 2008 at 1:53 pm
Those iPod buying parents don’t bother me nearly as much as the fools on Wall Street who are about to bonus-out millions of dollars to part-of-the-problem executives.
December 1st, 2008 at 3:25 pm
Mike,
You are correct. After 9/11 Bush told Americans that their patriotic duty was to spend (or continue spending). Americans being true patriots went out and shopped for everything and the patriotic bankers did their part by lending them everything they wanted and more.
Americans are just victims and the rest of the world should send us more money so we can consume more.
Wendy,
I know the paradox of savings problem. It really shows how convoluted mainstream economics has become when they think in a massive systemic crisis of insolvency, they are urging consumers to and the government is taking on massive new debt. Unfortunately, the US and a number of other nations such as the UK need to go cold turkey.
But particularly the working poor and middle classes have to protect themselves and saving is the only way. There will be no bailout for them.
David,
You are right about cash. It is not so safe given the tendency by our government to begin printing money. Still paying down debt and building a nest egg of say one-year’s expenditures in cash and near cash equivalents is very prudent. Of course, being more scared than most, I have two year’s expenditures saved.
Hayden,
The fools on Wall Street have already made off with the loot. The person buying the iPod while close to insolvency is threatening the well being of her children. So yes prosecute the WS guys and confiscate their ill-gotten gains, but we need to take responsibility for our situations and do the right thing.
So yes WS fools bother me, but so do main street fools. When the hurricane is blowing there is on excuse for anyone to not prepare as best they can.
Martin
December 1st, 2008 at 4:10 pm
I can’t belive the mindset of people who go shopping when there is a recession, spend more than they can afford, and ignore the possibility that they may the next to be laid off. I saw a news clip on CNBC of shoppers rushing into a WalMart and saw that each one of them was clearly, substantially overweight, and dressed in cheap looking clothing - and here they were, rushing to buy more cheaply made stuff. I think, in horror, of that clerk trampled to death by people like these in a Long Island WalMart recently, and think about how extremely short sighted, and addicted to immedite gratification many have become…. The author is right about this being a time to “hunker down”. An economy that depends on the population continually overspending needs to be changed.