It's about F'ing time: Spending < Income

soupcxan · 07-02-2008, 06:57 AM

From the Times today, emphasis on the last sentence:

"Back when housing prices were still rising, Americans borrowed exuberantly against the value of their homes to finance renovations, vacations and shopping sprees. But that artery of finance has constricted considerably along with access to credit cards, forcing a reversion to the traditional limits of household finance. Millions of American families must now confine their spending to what they can bring home from work."

Well duh, how did they think this was going to play out? That they could use debt to finance consumption in excess of their income in perpetuity? This can only be a good thing for the country in the long run (the short-term pain will be worth it). The amount of debt that was incurred to finance discretionary purchases like vacations is just disgraceful. At least if they had bought a car, it would've depreciated over a few years - the residual value of clothes and vacations is bascially zero.

TromboneAl · 07-02-2008, 07:10 AM

Now everyone is going to be like us. We are so screwed.

CitricAcid · 07-02-2008, 09:08 AM

This is shocking! You can't perpetually spend more than you make? Times must be credited with a new discovery for this. This will be great for the credit market in the long run, or it will just show people that no matter how bad it gets we will always recover so we will test the boundaries of our credit spending in 15 years when the credit bubble re-expands.

Texas Proud · 07-02-2008, 10:27 AM

Quote:

Originally Posted by CitricAcid

This is shocking! You can't perpetually spend more than you make? Times must be credited with a new discovery for this. This will be great for the credit market in the long run, or it will just show people that no matter how bad it gets we will always recover so we will test the boundaries of our credit spending in 15 years when the credit bubble re-expands.

Uhhhh, tell that to the federal gvmt!!!!

cashbalancetrouble · 07-03-2008, 07:48 AM

If I were a betting person I would say, "

"Congress will be the last to learn they cannot spend what we do not have... and they can't get."

"Sons and daughters of America, can we have your piggy banks?"

**Want2retire** · 07-03-2008, 07:53 AM

Quote:

Originally Posted by soupcxan

Millions of American families must now confine their spending to what they can bring home from work."

Oh the poor BAYBIES!!! Whatever shall they do!

Sometimes I think people like that are handicapped in life, because their mommies told them they were special and didn't have to follow life's rules like others do.

aaronc879 · 07-03-2008, 08:08 AM

Millions of American families must now confine their spending to what they can bring home from work."

Hey, there's an idea.

FinanceDude · 07-03-2008, 08:08 AM

If the American consumer reduces spending, MANY business models will be screwed, since those business models DEPEND on the consumer spending MORE each year, through easy credit terms and discounts.

StJohnsWood · 07-07-2008, 06:45 AM

I will believe it when I see it. How can you keep up with the Jones?

samclem · 07-07-2008, 07:20 AM

Quote:

Originally Posted by StJohnsWood

I will believe it when I see it. How can you keep up with the Jones?

Not a problem anymore, if the Jones's house is boarded up and they've conceded the keep-up race. This is the 2008 version of "keeping up"--we call it "last man standing".

CitricAcid · 07-07-2008, 10:04 AM

Quote:

Originally Posted by samclem

Not a problem anymore, if the Jones's house is boarded up and they've conceded the keep-up race. This is the 2008 version of "keeping up"--we call it "last man standing".

The grass is always greener on the other side, however. But, does that include if the grass is unmowed and the foundation is crumbling on the foreclosed and boarded house?

Perhaps the new way of keeping up with the Joneses is looking at the Jones pull that purposeful-walk-away-foreclosure-thingy and buy a new house and then do the same thing.

Independent · 07-07-2008, 12:41 PM

Quote:

Originally Posted by FinanceDude

If the American consumer reduces spending, MANY business models will be screwed, since those business models DEPEND on the consumer spending MORE each year, through easy credit terms and discounts.

I'm fairly certain that profits go down if businesses that have been relying on a growing market find themselves with a level market.
But I don't see otherwise healthy companies going out of business.
If a few that are already marginal slip below the waves, well, that's just good old creative distruction.

07-02-2008, 06:57 AM	#1
soupcxan Full time employment: Posting here. Join Date: Aug 2004 Posts: 694	It's about F'ing time: Spending < Income From the Times today, emphasis on the last sentence: "Back when housing prices were still rising, Americans borrowed exuberantly against the value of their homes to finance renovations, vacations and shopping sprees. But that artery of finance has constricted considerably along with access to credit cards, forcing a reversion to the traditional limits of household finance. Millions of American families must now confine their spending to what they can bring home from work." Well duh, how did they think this was going to play out? That they could use debt to finance consumption in excess of their income in perpetuity? This can only be a good thing for the country in the long run (the short-term pain will be worth it). The amount of debt that was incurred to finance discretionary purchases like vacations is just disgraceful. At least if they had bought a car, it would've depreciated over a few years - the residual value of clothes and vacations is bascially zero.

07-02-2008, 07:10 AM	#2
TromboneAl Thinks s/he gets paid by the post Join Date: Jun 2006 Posts: 3,841	Now everyone is going to be like us. We are so screwed. __________________ - Al -- Always serious, never joking. No, wait. Never serious... Always... I forget.

07-03-2008, 08:08 AM	#8
FinanceDude Give me a museum and I'll fill it. (Picasso) Give me a forum ... Join Date: Aug 2006 Posts: 6,732	If the American consumer reduces spending, MANY business models will be screwed, since those business models DEPEND on the consumer spending MORE each year, through easy credit terms and discounts. __________________ Consult with your own advisor or representative. My thoughts should not be construed as investment advice. Past performance is no guarantee of future results (love that one).......:) I am so conservative I make Reagan look like a liberal........:)

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07-02-2008, 09:08 AM	#3
CitricAcid Full time employment: Posting here. Join Date: May 2008 Posts: 546	This is shocking! You can't perpetually spend more than you make? Times must be credited with a new discovery for this. This will be great for the credit market in the long run, or it will just show people that no matter how bad it gets we will always recover so we will test the boundaries of our credit spending in 15 years when the credit bubble re-expands.

07-03-2008, 07:48 AM	#5
cashbalancetrouble Dryer sheet aficionado Join Date: May 2008 Posts: 37	If I were a betting person I would say, " "Congress will be the last to learn they cannot spend what we do not have... and they can't get." "Sons and daughters of America, can we have your piggy banks?"

07-03-2008, 08:08 AM	#7
aaronc879 Recycles dryer sheets Join Date: Jan 2006 Posts: 280	Millions of American families must now confine their spending to what they can bring home from work." Hey, there's an idea.

07-07-2008, 06:45 AM	#9
StJohnsWood Recycles dryer sheets Join Date: Jan 2008 Posts: 137	I will believe it when I see it. How can you keep up with the Jones?

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