Economics 101

[WoVeU]

I set here watching these stories on people losing their jobs and what measures they are taking in the household or what measures they could take and it just cracks me up. This county's terrible Macro outlook is just fed by the hideous Micro-Economics of Americans. People don't save enough, many not at all, and then many that save also build credit card and other bad debt that surpasses their savings. So yeah, a job loss and people employ major cut backs add in all the other families in the region and businesses get hit hard. (Note: Wait till we reflect on all these government loans and spending while also suffering great decline in tax revenues!)

If Americans were better at saving (shaving some off the top) during good economic times. Then also saving even more when the economy is running like mad we wouldn't see such deceleration in the economy. The savings supports a healthy economy and doesn't allow for over acceleration, and really would have kept the credit markets from turning into such sewage. In addition to not over-accelerating the economy when the economy still slows then Americans can back off savings and then spend some of the savings. You would not have such bad economic times, but this has been talked about for 40 years and people don't get it. Americans are their own worst enemy!

[Dossenator]

Agree.

[Spence]

No one can wait for what the what. They have to have it now.

[WoVeU]

I thought much on buying a single-wide and living there for 4 years and then buying a cheaper double-wide to live in for 6 years, when the wife asked me about buying the last house. I figured we'd save $1200 a month living in the single (plus $150 in utilities) and $900 a month living in the double. This was part of my plan to save a half-million in 13 years. The wife didn't go for it???? I just wanted the freedom and simple living for a while! I thought it was the ultimate delayed gratification plan.

[Spence]

When we built our house I took out a thirty year mortgage, but I had full intentions of paying it off in ten years. The bank said I could borrow three times what I wanted to borrow. That is a problem. People don't go in with a plan, then they find out they can add another thousand square feet with the extra cash. Then they want the pecan flooring instead of the oak. They borrow so much that they strap themselves, because the bank will give it to them. I will have my house paid off in three years. I have money back for my kids education and I pay my credit card off every month. I have never had a balance.

All that and I still have lost a thousands of dollars in the stock market. I didn't put money in to start with that wasn't money I needed. I won't even think about the total of my portfollio until five or ten years before I retire, if I retire. I'm not sure I even want to retire at this point.

[WoVeU]

We save money. I am paying on or new house and the one we haven't sold yet. So I am pretty sure we bought less than half the house we could afford...we still save a little. Credit cards we used them to our advantage....I've made a good deal of money off them since 94, letting them bank roll me for 0 to 3.9%. I've bought 3 cars on credit cards because I manipulate them so easily.

[Derek]

Ditto on ALL points.

It's funny, we were having this SAME discussion during lunch today. It was more centered on what put us in this place.

I place it firmly in the gov. hands...some people are too quick to blame it on greed, because that's what they are told by NBC, etc...and it's just easy to believe.

[WoVeU]

Well I know I almost started another post on Barry Bonds and all the other MLB investigations into steroids...let it go is my take. I don't care enough to spend the federal funds they are putting to that cause!

If they can go after those guys by putting them in such a hard place, testifying before congress. We can charge Corporate Executive and put the &55es is jail, They have plenty of laws for businesses. No way you can come up with some fraud charges, accounting charges, make them testify before congress then end up charging them as well if necessary!

Greed is fine...but it is the Ultra-Liberal way to scream out against Capitalism. No way there no crimes committed! Hundreds of millions were robbed and plundered.

[Spence]

US laws penalize savings and encourage consumption. You can blame the folks for voting in the peeps who set up this system, but not for following the incentives it creates.

Yes, you can. You can blame them for not being prepared. You don't invest money you can't afford to lose. You save that money. There are plenty of creative ways to save money and still make a decent interest rate. Not as high as you can get in the stock market, but if long term savings is the goal, there are rates to be had. The big problem with savings is you have to have two kinds, long term for the future and then an emergency fund for unexpected expenses that come up. One you can use, the other is off limits.

[WoVeU]

I agree with Spence...it just boils down to not gambling in the name of savings or investment!