Chri$tma$ Cheer? Not so much

Steve Lopez, who writes a really excellent column in the LATimes, had a good one today on the puzzle we face over the economy.

On one hand, we consumers are told that the state of the economy is determined by how much we spend so we all need to get out there and spend spend spend or the economy will fail.

On the other hand, we’re all told to get our economic houses in order, get out of debt, quit living on borrowed money, and generally return to the days when Americans knew how to count their pennies.

Who’s right? In his column, Lopez talks to a local economist who says the latter advice is. You can read the column here (click!)

It’s nice to see that, and nice to see that people are cutting back. Sadly, this means lowered state tax revenues, but even those seem to be leveling out.

The spending of the boom years was all debt-supported, clearly unsustainable, and we need to do this. If it means buying fewer toys for Christmas, and more money spent in local stores for local stuff like food, well, those factories in China will get by somehow. Maybe Chinese children will get a new passion for action figures, who knows?

What disturbs me still are stories saying that the housing market needs to “recover.” The housing market needs to stay down, because even down as it is now, it is still higher than it was five years ago. Since wages have not gone up in the last five years — during the Bush years they actually went down in terms of buying power — stuff we buy has to cost less too, just to stay even.

My brother, a real estate lawyer, says from where he sits bankers have tightned up so much it’s impossible for anyone to get a loan, and maybe they have. Some over-compensation is inevitable, especially after all those years when they’d give a mortgage for half a million dollars to anyone with a pulse and, sometimes, without.

So ride it out — the bouncing hasn’t finished yet. Best thing to do is what Lopez’ economist says to do: Take care of Number One first, pay down your debt, don’t charge anything you can’t pay off at the end of the month.

And realize having that new iPod won make you have a Merry Christmas.

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2 Responses to Chri$tma$ Cheer? Not so much

  1. Doug Gibson says:

    Economies can’t be lifted by pols urging us to spend, spend, spend, and aren’t they all the example of reckless spending! On a personal or family note, spending too much if we can’t afford it can cause tremendous stress, self-loathing, fighting, divorce … it’s just a bad thing. We need to hunker down, be frugal and ride out this long economic mess. When the recession’s over for consumers, spending will rise and not be forced.

  2. Dovie says:

    The US middle class is being broken by subsidizing big companies that are not even “American”. We are killing health care because it might hurt the pharmaceutical companies. They are global.
    We will subsidize them and we will not get a return. They are entering other markets. And it’s too late to stop it – they are too big to fail. Bush was unable to do anything (although I think he was too stupid to identify the problem), and so is Obama, really.

    We should have dealt with the reality of globalization in the first place. Instead, we thought we would prevent it by being conservative and silencing the messengers. Denial put us here. The next reality that Americans had best start dealing with is that it is never going to be 1950 again. Killing the “liberals” ain’t bringing it back.

    All our leaders have done in the past decade is spend us into slavery, create divisions, and lower the national mentality to that of a third-world clan-based theocracy. We have failed in raising anyone else to “our level”. Perhaps we really aren’t so superior.

    Taking all this to heart, I say it’s best to take care of business for yourself. Buy guns and ammo – Republicans turned out to be right about that one.

    I did not used to be this way, either. Merry Christmas.

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