Posted on 10/28/2002 12:17:35 PM PST by Willie Green
Actually, this is the WORST thing for everyone to do. It guarantees a downward spiral (the "Paradox of Thrift"). Right now people should be digging into savings and taking on debt to buy things in anticipation of better times ahead.
Unfortunately, during the go-go, cocaine powered Clinton years, NO ONE saved like they should have. During the years of above average economic growth, debt of all kinds went up. Everyone gambled their money in the stock market. It was ridiculous. My wife's decorator was daytrading, for crying out loud!?! One time, she mentioned a highflying tech stock she bought and I decided to see how much research she'd done. PE? Didn't know. Competitors? Didn't know. Market share? Didn't know. Apparently, the stock chart showed a "cup and handle" pattern which gave a buy signal. Of course, she's blown all her gains and lost most of her principal since the bubble burst.
I've had enough of this financial drivel that passes for patriotism. The wise ones are storing away their grain for future storms on the horizon. You'd best do likewise, else you're gonna be like the proverbial grasshopper.
Trajan88; TAMU Class of '88; Law Hall (may it R.I.P.) Ramp 9 Mule; f.u.p.
Going into debt now is foolish and at this point in time, nearly suicidal.
IMHO, a revolution is unavoidable unless big-time changes are made ASAP. Loss of jobs and wealth to other countries is only one factor in the growing discontent in this nation, but it's a big one. It's not quite "haves" and "have nots" yet, but when more people find their jobs outsourced in order to keep fewer and fewer investors happy, that's a recipe for disaster. Hopefully it won't come to that, but I don't see much to be optimistic about.
Scouts Out! Cavalry Ho!
IMHO, a revolution is unavoidable unless big-time changes are made ASAP. Loss of jobs and wealth to other countries is only one factor in the growing discontent in this nation, but it's a big one. It's not quite "haves" and "have nots" yet, but when more people find their jobs outsourced in order to keep fewer and fewer investors happy, that's a recipe for disaster. Hopefully it won't come to that, but I don't see much to be optimistic about.
Scouts Out! Cavalry Ho!
IMHO, a revolution is unavoidable unless big-time changes are made ASAP. Loss of jobs and wealth to other countries is only one factor in the growing discontent in this nation, but it's a big one. It's not quite "haves" and "have nots" yet, but when more people find their jobs outsourced in order to keep fewer and fewer investors happy, that's a recipe for disaster. Hopefully it won't come to that, but I don't see much to be optimistic about.
Scouts Out! Cavalry Ho!
Scouts Out! Cavalry Ho!
That's a good thing ... I was out for 8 months ... luckily I had about 8 months worth of savings and JUST made it thru. The stock market crash completely wiped out the 401K BUT I still have my house equity. BUT if I get laid off again before I can resave that 8 months safety money, which doesn't happen over night ... I'll be picking out that sweet spot the live in ... under the bridge. In 25 years of engineering .... I have NEVER seen it anywhere near as bad as now. That means since the late 70's thru the 80's and the 90's. I took a job that is only distantly related to my disipline and took a 25% pay cut to boot. Luckily the kids are gone and the cars are paid for ... the're getting old though (200,000 miles on one) but the payment is right. I would hate to think about how it would be if I still had a couple of kids at home and a car payment. Problem is that the retirement money is now gone and companies DO NOT HIRE people over 50 (except MAYBE McDonalds). I have to face the fact that I am in my last good paying job and make to best of it.
I don't know about the "fewer and fewer investors." I read recently that the majority of stocks are held by pension funds. (If I recall correctly, the book was Peter Drucker's Post-Capitalist Society) If that is the case, than we have the paradox that while people's careers are foundering, at least their pension funds should be doing well. But they are doing well precisely because the companies are able to maintain or improve profitability by reducing their cost of input. Unfortunately this means exporting our manufacturing jobs.
So, while an American worker's buying power diminishes (because salaries are not keeping pace with cost of living increases), his mutual funds, 401K, and pension fund should be doing pretty well. And because his buying power is shrinking, he is forced to buy cheaper, foreign-produced goods, rather than spend the few extra dollars to "but American", if, indeed, that option is even offered. So it's a vicious cycle, mollified only slightly by the hope that American-owned companies (and their American investors) will prosper. Thus, the pension funds, at least, are secure.
Of course, you've got to actually have a job in order to have a pension fund.
A company employs 100 people who make an average of $40,000 a year to sell a widget that retails for $100. The company sells 100,000 of these widgets a year. That's an annual payroll of $4,000,000 a year but the consumers have to pay a total of $10,000,000 for these 100,000 widgets.
Now the company moves the factory overseas to take advantage of lower labor costs and that widget now retails for just $40. So while $4,000,000 a year in local income is lost, consumers now have an extra $6,000,000 in their pockets to spend on other things because they are paying 60% less for these widgets. That extra $6,000,000 a year could be used in local restaurants, home improvements (putting contractors to work) or to buy boats (putting more boatmakers to work).
The company is not going to retail the widget for $40 after the move. They will retail the widget for $105, "in order to pay for costs associate with relocation of operations." The difference in labor costs between the M$ 4 of U.S. based operations and the (unspecified but lower) foreign based operations will go directly into the corporate executives' pockets.
True, the executives will then spend that money on marble toilets and private jets. Meanwhile, though, the 100 people are not spending any money because they don't have any to spend.
My God, I'm sounding like a Democrat here. Still, I don't see how the above scenario could be defended as a good thing to happen.
Yeah no sh!t. As a grad student I make "poverty"-level wages but I ain't starved to death yet-- one makes the concessions. 35k is alot of money, to ME. Hell I could move out of the $300/mo apartment and get a $400/mo apartment-- I could get Kraft mac and cheese instead of generic... I could even replace my running shoes more than once a year...
You're right, wide, these folks were (are) dumbasses and they brought (are bringing) their economic "hardships" on themselves... Some of us know how to live Spartan... Blows my mind that they beg their parents for rent money...
I stopped reading right there. Age-discrimination laws are ignored with impunity. The government won't side with you unless you're an official minority, and companies know that even with losing a class-action suit, their expenses are less than keeping the old farts on board.
This is based on the widely-held belief that only management means anything, and there are always younger folks, or overseas outsourcing, to do the dirty work, and still be disposable. Who wants a twnety-something fast-track VP to have to deal with a 55-year-old worker who has lived and breathed his job for 35 years?
Putting cash in your mattress hurts the economy, certainly. Putting your money into financial instruments such as bonds, CMOs, etc. strengthens the general economy as well as your own portfolio.
Consumer spending for the sake of consumer spending depletes invested capital and creates a negative return. It discourages companies from developing new products and increases the real cost of capital for all borrowers.
Today, they get bags of groceries from a San Jose food bank...
They're cooking for themselves now, which is a start, but they don't need the food handout. (The "lavish trips" in their recent past says to me that they don't have kids.) You can eat, and eat well, cooking for yourself on less than $50 a month per person.
...have joined the ranks of the uninsured...
My taxes pay for any emergency care they would need for a car accident, etc.
...and beg their parents for $1,045 in rent for their 600-square-foot apartment.
30 and 35 years old and hitting up the folks for rent? My eyes are rolling so far in the back of my head that I can't even see.
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