From Minyanville today- a great quote ofnthe current "crisis": [Thanks L!]
Unlike many, I have never thought that the U.S.’ current crisis was a “subprime” crisis, or even a more-broad mortgage crisis. No, to me, this has been and will continue to be an evolving consumer consumption crisis which started with the largest and most leveraged consumer asset (housing) and the weakest population of consumers (subprime borrowers).
But I think it’s important to recognize that with each passing day, as credit is tightened and unemployment grows, more and more asset classes and population groups will be affected. And you need only look at the news from BMW above or last week’s earnings report from Harley-Davidson and Starbucks to see that consumers can no longer afford their aspirations.
It’s clear that the problems are expanding beyond the subprime mortgage market. The question is, where will it end?
If you don’t aspire to drink Starbucks’ overpriced coffee, or to own a Harley or a BMW, are you in a consumption crisis?
Everyone is cutting back in the areas that can easily be cut back. Beemers and starbucks. Triple the price of extravegance. But this sucking you dry crap is disgusting. Is there anybody in charge anymore? The looters now wear suits and run power companies or play the commodities. Too much GREED will backfire.
Living Beyond Our Means
Whocoodnode? Woeisme!
I aspire to choose whether or not I go to work in the morning. Right now, it is just a fantasy.
“Your Money or Your Life” really hits home for me. I could drive a 30-40k vehicle, but, choose to drive my vehicles for many many years before replacing them with 3-5 year old used vehicles.
AZSlim-
I don’t necessarily think it’s a crisis for consumers- but it’s a big problem for BMW and SBUX!
My big fat gut would suggest that I am not in a consumption crisis. Well, over-consumption, maybe.
Manfre - I’m the same way, and I realise that’s different than most folks. Most people will spend every dollar then can get their hands on - earned or borrowed. Now that they can’t get their hands on the borrowed, we have a consumption crisis? All we’ve done is taken the kids out of the candy store.
The looters now wear suits and run power companies…
Darn those companies that force you to buy their stuff!
If you got a big fat gut a belt tightening from less consumption might be a good thing. Grinding your own wheat will put more fiber in your diet too. Exercise from that victory garden will add health benefits no Jenny Craig could offer, plus organic veggies. It will be cathartic for America to get off their butts to survive.
The word “aspiration” is interesting. I know someone who works as an executive with Coach. She tells me that the customers who can’t afford their purses but by them anyway (usually with two credit cards plus cash for a single purchase) are referred to as “aspirational buyers.”
Let me comment on the “big company greed”. . .yes it is there - nothing new, but the current runup in prices can be traced right back to Ben Bernake with his interest rate cuts and subsequent dollar collapse. . .I am in Europe this month working, and gasoline and energy prices here have not gone up much. . .why? Oil is priced in dollars, not Euros. . .when the dollar goes down, we in the USA pay more, but here in the Euro/CHF zone, there currency has gone up more than 20%, and therefore things have not gone up much.
As for consumer spending - very much agree - we have built a society around cheap energy, and now things such as discount airlines, and 60 mile commutes are history. . .a lot of adjustment will be taking place in the next 5 years. . .flying will be a luxury like it was when I was young, and families will go back to one car.
I agree with Brucewho that the present and coming changes are cathartic. Aspiration that comes from reading, listening and dialogue, play with loved ones, and creativity through hard work and teamwork will surely beat the aspiration that comes from watching commercials and comparing one’s self to over-consuming neighbors.
Speaking of commercials, the “commercials” keep telling us that the “housing crisis” is a crisis of epic and tragic proportions. I’m not buying it. I feel like a return to affordability in housing for the middle class, and a return to thinking of one’s house as a home and not a speculative investment, are very good aspirations for all of us.
Mark in SD,
I have to agree with much of what you say. My wife has worked for an airline for 14 years. It has only gone downhill for the industry over th last decade. I welcome a change in affordability for a ticket. The flights are too crowded and the pasengers are too rude anymore. I will be in Europe this summer I will see the net effects you speak of.