JonB makes some interesting points. He is one of my favorite posters. However, I am going to disagree with my friend here. I respect his experience and know he is accurate in what he says about the 70's. I was there too. We are experiencing inflation right now. You only have to look at your grocery bill to see this. Bear with me here, this is about sailboat prices. You just have to read a bit to get there...
Gasoline is up 80% or so over the last five years and shows no sign of going back down. It never will. At the same time, property and the possessions one normally collects, have devalued over this same time. What the heck is going on here ?? If we have inflation, everything goes up, right ? Well, the collapse of a stable middle class is causing this.
Since the 70's, this country has lost over 8 million stable jobs in manufacturing. The kind of job where you could count on many consistent years of employment, at three times minimum wage or better. Stable jobs allow people to make long term borrowing commitments. The planners who think that the service industries can make up for this loss just don't get it. You cannot sell each other pizza and do each other's laundry to have an economy. One only has to look at all the empty chain restaurants coast to coast to see this is true. These are not long term jobs. The rush to buy farmland last year, doubling the per acre cost, indicates the strategic planning of folks who have a dozen or so millions to preserve and spend more on financial planning than we can imagine. They bought farmland because there is nothing else secure to invest in, for the long term.
OK, so what has this got to do with sailboat prices??? I'm getting there. In the time from '96 to 2006, things were good and credit was easy. The calm before the storm. People used tactical, i.e. short term planning. There was little effort spent looking at the strategic, i.e. long term situation. I think we all knew it wasn't going to last, and we all got what we could while we still could. What the heck. We survived the Dot Com bubble, and before that, the savings and loan crisis. How bad could the housing bubble be ? People bought expensive boats, houses, and whatever else they saw as having long term value. They expected inflation, so they got it now.
The end of the middle class brought this ability to service credit, to an end. In an environment of fear, people hoard and do not lend. House loans are at an all time low interest rate. Try to qualify for one working at a chain restaurant. Can't be done. So the people who normally would get a loan for a used boat, for various reasons, will not be getting that loan. If you cannot say with certainty that you can pay the loan, you can't get it. All of a sudden, we have a cash economy. Nobody keeps cash, just as JonB has said. Cash shrinks if you don't buy stuff with it. But now, the stuff you buy with cash shrinks too ! Because we are all cash short. We are used to walking down to the bank and getting the cash to purchase this next item, whatever it is. Now we have to do this with what's in our pockets and that, my friends, is almost nothing. We have been conditioned by years of experience not to have cash and to leverage our credit to get ahead. That is a model that is no longer valid. This is exactly why the sailboat market has "sunk" if you pardon the metaphor.
There are other factors as well. Demographics, fewer sailors and such. The actual value of a dollar in terms of how much oil/gold/cheese, whatever, that you can buy with it. Fear, and the fear is justified ! The Universe is 14 billion years old, the debt is 14 trillion. The government has borrowed $1000/year, SINCE THE BEGINNING OF TIME. If that doesn't scare you, you are a rock !
Those factors and more, can nuance the causation but cannot change the results. If it weren't for girls, I think I'd crawl into a hole and stay there. What sells boats, is the belief that there is something better to come, that life is worth living, and is most certainly is ! The girls, the children, and that next sunrise over the water, are all worth whatever we can do to make it all happen. So we all collect the deposit cans, work a little overtime, and turn down the thermostat, to make it all happen.
"Ulysses" - Alfred Tennyson
Last edited by TomandKarens34; 01-03-2012 at 10:25 AM.
Reason: wording incorrect