Market crash: are we there yet ?

[TropicCat]

Originally Posted by PBzeer

Where the parents of the Boomers worked and saved towards their major purchases, we now see people "wanting it all", right from the git-go.

A logical point of view. But, the credit crunch kicked in a year ago. The pull back in consumer spending occurred 9 months ago. If it isn't being spent, where is all this money you are talking about? If your view were true, this money has to logically be somewhere else, if it in fact exists.

Show us the money John. If you do, you're right and I'm wrong. If you can't find it. You're wrong and I'm right.

It's that simple.

This is incredibly important. No super power has survived the collapse of it's economy. This is actually a matter of National Security.

[PBzeer]

The rise of the credit card lifestyle took off in earnest in the 80's with the advent of affinity cards, pioneered by MBNA. With an incentive to "swipe the plastic" to gain flier miles and other perks, even the most routine of purchase started going on the card. Before you knew it, all of a sudden, the card was maxed out. Buy hey, no problem, there were plenty more cards available and banks were begging people to take them. Dept piled on top of debt, and people were using one card to pay on another.

Now, there's no more cards to replace the maxed out one's. No refinancing the mortgages, again. Sooner or later, the fairytale had to end. Now it has. But it's a fairytale we been reading for over 20 years, thinking it would never end.

When you start seeing speciality stores closing up, then the economy is in bad shape. Or when there's no giant blow-up Santa's for sale in front of Walmart. At this point, I see no need for panic. Might be a good time to buy stock in Dollar General or Big Lots though.

[TropicCat]

Originally Posted by PBzeer

Before you knew it, all of a sudden, the card was maxed out. Buy hey, no problem, there were plenty more cards available and banks were begging people to take them. Dept piled on top of debt, and people were using one card to pay on another..

No argument on this. However, you missed the point. Why were people using credit? That's the point.

If as you maintain, it was for unneeded goodies, we should see no problem in consumer spending now... or with increased savings rates.

Instead we have a tsunami building in the credit card companies as people are defaulting.

1.) They are defaulting on their credit cards at an unprecedented rate.

2.) They aren't saving anything this year...same as last year and the year before...etc..

3.) They are purchasing less

So, if that wage group of folks making $75K a year, or more, is growing... where's their money John.

Where is it??

It isn't there. It never was there. That's the point, as this can only happen if the middle class is shrinking. If the middle class were growing, we would have one less problem in the world right now.

This exchange is exactly why conservatives are getting tossed on ther fannies this year. They can't even acknowledge the problem, which is why it doesn' t get fixed.

Instead it blew up on all of us.

[SailKing1]

Income growth rate distribution.

Pew Social & Demographic Trends: Annual Growth Rate of Real Income Across the Family Income Distribution: 1947 to 1973 versus 1973 to 2005

[chucklesR]

Originally Posted by TropicCat

What? That the Dems were onboard for the slimmed down 1st version of the bill, Republicans refused? Or, that all those earmarks had to be added so republicans would vote for it?

There you go again, the slimmed down version first presented was slimmed from 3 pages to 412 pages, NOT THE OTHER WAY AROUND.

Wake up

The extra pages added to the second version was what 30 pages, for republican votes. Democrats added 409 pages so they would vote.

Try to learn math, and really, work on your definition of accountability and responsibility so that it includes all parties, not just one you don't like. Include yourself in that - your lack of integrity is getting more than annoying, it's mystifying.

[erps]

No argument on this. However, you missed the point. Why were people using credit? That's the point.

Because this new batch of youngsters wanted everything their parents had, which took years to accumulate, NOW, and easy credit let them do it.

[chucklesR]

Originally Posted by erps

Because this new batch of youngsters wanted everything their parents had, which took years to accumulate, NOW, and easy credit let them do it.

Exactly, so if your kids have a credit problem and you didn't teach them better, look to your mirror for a partial portion of the cause of the problem.

I sweat the possibilities every time I see my most successful child take on another loan or obligation, even though he's doing just fine with a house, condo (investment) and a multifamily rental (investment) he's had for 3 years now (he turned 28 two months ago).

[TropicCat]

Originally Posted by SailKing1

Income growth rate distribution.

Pew Social & Demographic Trends: Annual Growth Rate of Real Income Across the Family Income Distribution: 1947 to 1973 versus 1973 to 2005

Great chart. Of course if the conservatives look at it, their argument goes up in smoke.

Once again, if you don't see the problem, you can't fix it.

[PBzeer]

As shown by a study by the St Louis Fed, savings have been on a steady decline since the '80's, accelerating down, with the increase on the reliance of credit. When more of one's income is used to pay down debt, there is less to set aside as savings. Not only is it simple logic, it's simple math. When one has a finite amount of income, then it's uses must be prioritized. And, since unlike government, ordinary people have to pay their bills when due, higher credit debt, leaves less money for savings.

"Consumers have racked up more than $2.2 trillion in purchases and cash advances on major credit cards in just the last year. And it's become a habit for them to spend more than they have. The overall credit card debt grew by 315 percent from 1989 to 2006, according to public policy research firm Demos.


To compound the problem, fewer people are paying their credit cards bills on time. The percentage of people delinquent on their credit cards is the highest it's been in three years, according to CardTrack.com." CNN


The problem is not a lack of income, but spending beyond it.

[Chadfunk48]

I've only got one billion left and I am hurting.