Credit Crunch Reaches Main Street
 

It almost makes you want to put up a CPUSA stand on Wall St as a troll. http://www.discussworldissues.com/fo...ilies/wink.gif

Same.

I was at the dealership yesterday getting my battery replaced, and some of the people there were complaining about this very issue.

JM

I admire Americans and their willingness to fight global warming and take up freedom vacation. http://www.discussworldissues.com/im...ons/icon14.gif

Originally posted by Zkribbler


Newer cars = high-mileage hybrids. http://www.discussworldissues.com/im...ons/icon14.gif
Old cars = smog-emitting gas guzzlers. http://www.discussworldissues.com/fo...ons/icon13.gif People who buy new cars every year don't really save energy. http://www.discussworldissues.com/fo...ilies/wink.gif

Originally posted by Kuciwalker
It's not obvious to me that fewer car purchases are actually a bad thing. It's not the decrease in car sales, it's the sudden fall and losses as dealerships start closing.

The spin offs of the credit crunch could go way beyond what most people have been thinking.

Originally posted by notyoueither


It's not the decrease in car sales, it's the sudden fall and losses as dealerships start closing.

The spin offs of the credit crunch could go way beyond what most people have been thinking. More car factories close or layoff. No need to make what isn't selling. The slow down in US housing hurt the truck plants here.

Originally posted by Wezil


More car factories close or layoff. No need to make what isn't selling. The slow down in US housing hurt the truck plants here. It's houses yesterday, cars today, and the rest of the economy tomorrow.

Sock your cash away. Very few jobs are safe.

Yup. Lets stop spending more than we're worth. Banks included.

700Billion though says we can keep doing it!

Yaay!



We are so screwed.

Originally posted by notyoueither
I don't think this is how it was designed to work. You don't?

Perhaps not originally, but money is power... and those with power have been shaping our economy and politics to suit them.

The expansion and contraction of the market helps them. During the expansion they can sell off their assets at high prices. During the contraction they can buy back the assets (or seize them even) at minimal expense.

Then they're set for the next expansion. Sure there are casualties (even among the powerful) as no one can predict when it will turn exactly, and certainly everyone makes mistakes... gets [un]lucky... but it's obvious that some people (even among the lower classes) can make out very well in the end if they've set themselves up for the contraction properly.

It's JPM buying out other firms for pennies on the dollar. Or even getting the Fed to back the buyout. (Or having the Fed lend to them on the assets.) And who set up the Fed in the first place? JP Morgan. Now it's getting the US Gov to buy those assets for face value. Who's in charge of this and was calling for it? Paulson. Who just happens to have been the CEO for GS. But it's also smaller investors who have been in cash (so many people being in cash is one of the reasons for the contraction even), who will be able to buy up assets... stocks or houses or whatever... for much cheaper than they would have otherwise.

It's not a massive conspiracy. But it's certainly a bunch of people working for their own best interests, and gaming the system ... and in some cases even setting up systems ... for their own profit.

Are you seriously suggesting we use the Bible for economic planning? I'm saying it's rather ironic that a predominantly "christian" nation fails to understand some of the applicable concepts that are taught in the bible.

Joseph's interpretation of Pharaoh's dream was that there would be 7 fat years, followed by 7 lean years. To plan for this, the excess of the fat years was saved to provide during the lean years. This worked out well. (Whether it happened or not is really not important, it's the principle of using excess to guard against the lean years that matters.)

We go about this backwards. Fat years we consume to excess, leaving little (or less than nothing actually... since we go into debt) to get us through the lean years.

The Bible isn't an economic road map, but there are applicable concepts within it. If we actually understood them, at least we wouldn't make mistakes that are easily known to be mistakes... so much so that peoples thousands of years ago could recognize the expediency of the precautions we ignore.

Have Ben & Jerry's released "Credit Crunch" ice cream yet?

Originally posted by Agathon
Have Ben & Jerry's released "Credit Crunch" ice cream yet? I could go for some of that. Well, depending on what's in it. Fragile little dollar signs of chocolate that shatter the moment you touch them, or perhaps a green minty swirl suggestive of money going down the toilet?

Originally posted by Elok


I could go for some of that. Well, depending on what's in it. Fragile little dollar signs of chocolate that shatter the moment you touch them, or perhaps a green minty swirl suggestive of money going down the toilet? mmmmm... http://www.discussworldissues.com/fo...ies/yumyum.gif

Maybe also some nuts to represent the government gone mad. Ooh and some jet-puffed marshmallows to represent the housing bubble. The possibilities are endless, and delicious!

Originally posted by Provost Harrison


It wasn't a certain chubby Australian was it? http://www.discussworldissues.com/fo...ilies/cute.gif I have no idea who you are alluding to. None at all.

Originally posted by Darius871


mmmmm... http://www.discussworldissues.com/fo...ies/yumyum.gif

Maybe also some nuts to represent the government gone mad. Ooh and some jet-puffed marshmallows to represent the housing bubble. The possibilities are endless, and delicious! Ooh ooh and graham crackers to represent Phil Gramm's repealing Glass-Steagal! How could I forget that? http://www.discussworldissues.com/fo...nwitdornan.gif

Now I'm really hungry...

Originally posted by Aeson


Yah, Wells Fargo was advertising HELOCs (which were selling for pennies on the dollar) to build pools (judging from the ad) on their front page as late as this spring. I'm continually bombarded with bumph about pre-approved loans, and at the same time, savings and investments plans. Seems they want me to borrow at 6.7% APR so that I can invest in a tax free savings account at 5%. They is genius!

It's times like these when I love having a (federal) government job (and no debt).

Originally posted by Aeson
This is how it's designed to work. Boom on consumer debt spending... bust when no one qualifies anymore. (Via a combination of overpriced assets and consumers who are up to their eyeballs in debt trying to keep up with them.) Now is sorta the wrong time to be acting, it will play out one way or another, until there is real capitulation in the markets and through our economy... and most people have marked down their assets to the new "affordable".

Funny thing is how our (predominantly) "Christian" nation misses out on virtually every lesson taught in the Bible, in this case, with Joseph interpreting Pharaoh's dreams. I try to live this way. Only took debt a very few times in my life and paid it down fast as I could. When I got out of the army I walked to work until I got the $ to buy a car. Lived within my means for the most part. Never played the stock market, when our workplace gave us pensions we always cashed them before going to the Phils, not gamblers, thanks. Right now I got no debt and am looking at the world go nuts around me.

I figure things as best I can so the family can eat, so I'll use the little cash I have this trip to buy a rice field God willing. It may be that we can't send $ home for them soon so they will need to provide for themselves.

Originally posted by Lancer
I try to live this way. Only took debt a very few times in my life and paid it down fast as I could. When I got out of the army I walked to work until I got the $ to buy a car. Lived within my means for the most part. Never played the stock market, when our workplace gave us pensions we always cashed them before going to the Phils, not gamblers, thanks. Right now I got no debt and am looking at the world go nuts around me.

I figure things as best I can so the family can eat, so I'll use the little cash I have this trip to buy a rice field God willing. It may be that we can't send $ home for them soon so they will need to provide for themselves. http://www.discussworldissues.com/im...ons/icon14.gif

I've never had much money or stuff, but I've never been in debt either.

Something to look into:
http://archive.idrc.ca/books/reports/v212/paddy.html

(The fish will also consume mosquito larvae.)

Full of Doubts, U.S. Shoppers Cut Spending

Cowed by the financial crisis, American consumers are pulling back on their spending, all but guaranteeing that the economic situation will get worse before it gets better.

Joshua Lott for The New York Times
“We’re not selling S.U.V.’s and trucks at all. We saw it coming,” said Raul Trejo. He is a mechanic at Lattof Chevrolet, a dealership in suburban Chicago which is set to close.

David Maxwell for The New York Times
Daniel Kimble, a trucker from Oklahoma, said he had stopped eating at restaurants on the road, buying groceries instead.

In response to the falling value of their homes and high gasoline prices, Americans have become more frugal all year. But in recent weeks, as the financial crisis reverberated from Wall Street to Washington, consumers appear to have cut back sharply. Even with the government beginning a giant bailout of the financial system, their confidence may have been too shaken for them to resume their free-spending ways any time soon.

Recent figures from companies, and interviews across the country, show that automobile sales are plummeting, airline traffic is dropping, restaurant chains are struggling to fill tables, customers are sparse in stores.

When the final tally is in, consumer spending for the quarter just ended will almost certainly shrink, the first quarterly decline in nearly two decades. Many economists, who began the third quarter expecting modest growth, now believe the cutbacks are so severe that the overall economy did not expand either, and they warn that a consumer-led recession could be more severe than the relatively mild one earlier this decade.

“The last few days have devastated the American consumer,” said Walter Loeb, president of Loeb Associates, a consultancy, who said he worried that the constant drumbeat of negative news about the economy was becoming a self-fulfilling prophecy. “They all feel poor.”

For some Americans, the pain is already acute: jobs disappeared at a faster clip in September. For many others, day-to-day finances are fine for now, but the financial outlook is uncertain: 401(k) accounts are dwindling, loans are hard to get and house prices continue to fall.

Claudia Prindiville, a 41-year-old mother of three, is among those feeling anxious. Shopping at a Talbots store in Chicago’s northwest suburbs, she said her own family’s finances had not yet suffered. Still, she pulled out a coupon to buy a two-piece sweatsuit, and at The Children’s Place she bought pants and shirts from the sale rack.

“All the talk about how bad it is out there has started getting in my head,” she said. “I still need to shop for my kids’ school clothes, but I am definitely buying less for myself.”

Consumer spending, which accounts for nearly two-thirds of the economy, grew modestly earlier in the year but fell in July and August on an annualized rate. When the government releases quarterly numbers this month, they are expected to show that consumer spending shrank 3 percent or more. That would be the first quarterly decline since 1990, ahead of the 1991 recession, and the steepest since 1981.

According to interviews with shoppers, analysts and company executives, the impact of the financial news of the last two weeks has been palpable in many corners of the country, from car dealerships, which endured the worst month for sales in 15 years, to the flashy casinos of Las Vegas, where spending at luxury restaurants and stores and at gambling tables has gone from bad to worse.

“In the last few days, there has been a huge drop-off in foot traffic and almost zero sales,” said Gil Colon, sales manager at Villa Reale, a high-end art and furniture store in Las Vegas, who has laid off five sales people in the last five months, leaving three.

“People have lost their confidence. They have no buying power. They are losing their retirements, their vacation funds, and they are scared to commit to buying anything,” he said.

The picture is just as grim at suburban malls and city boutiques, where traffic is disappearing as retailers brace for what many predict will be a dismal holiday shopping season. Some have responded by reducing the number of sales people or their hours.

Taking a break outside an Office Depot store in suburban Chicago, Dave Cargerman, a 25-year-old sales clerk, said his hours had been cut back. “We got killed during the back-to-school sales,” Mr. Cargerman said. “And that time of year is usually our bread and butter.”

Nearby, employees at Lattof Chevrolet were preparing to close the doors this month on a business that opened in 1936. It may not be the last dealership to go: the percentage of people saying they expect to buy a car in the next six months, on a three-month moving average, has fallen to 5 percent, the lowest figure since the Conference Board started asking about such plans in its consumer confidence survey, in 1967.

“We’re not selling S.U.V.’s and trucks at all,” said Raul Trejo, 24, a mechanic. “We saw it coming.”

The situation is so uncertain that some retailers are simply not even trying to estimate their sales. Pier 1 Imports and Circuit City stores recently withdrew their guidance to Wall Street about earnings and said they would not offer any more predictions this year.

At a retail conference in New York on Thursday, Michael W. Rayden, chairman and chief executive of Tween Brands, which owns the Limited Too and Justice chains, spoke about consumer fears. “As I travel around the country and listen to moms and little girls, it is amazing how much even these 10-year-old girls are aware that something is going on,” he said. “Mom is saying, ‘I can’t afford that.’ ”

Even Apple, maker of the iPhone, is not immune as concerns mount about consumer electronics. The stock of Apple ended the week down 19 percent after two stock analysts suggested that the rapid cooldown in consumer spending would put an end to the company’s hot sales streak.

Casual dining restaurants, which have struggled in recent years because of a glut of restaurants and higher-quality fare at fast-food chains, have taken a beating already this year, forcing the Bennigan’s chain to close and leaving several others struggling. “I think September could be the worst month of the year, and we’ve had a lot of bad months,” said Lynne Collier, an analyst at KeyBanc Capital Markets who covers the restaurant industry.

At a Chili’s Grill & Bar in the Arlington Heights suburb of Chicago, Nichol Bedsole, a 23-year-old salon manager, said she used to eat at places like Chili’s at least once a week but no longer does.

“Now it’s more like twice a month, and it’s somewhere cheap, like Subway,” she said. “I have a lot of bills to pay.”

Consumers are cutting back on air travel, whether for business or pleasure. Passenger volume is dwindling even faster than airlines can sideline planes and cut poorly performing routes. At American Airlines, domestic passengers flew 11.7 percent fewer miles in September, while the airline cut 9.4 percent of domestic seats.

The consumer slowdown in recent weeks comes after spending drops in July and August, when tax rebates came to an end. The financial shocks on Wall Street accelerated the decline, along with limits on consumer credit imposed by some banks.

“Consumers have become quite concerned that the recession, which they think is already under way, will last longer than they anticipated and will be deeper,” said Richard Curtin, director of the Reuters-University of Michigan Surveys of Consumers, describing the most recent poll. “They see their worst fears coming true.”

In addition, household net worth, which greases spending, fell $6 trillion over the last year, with $1 trillion of that in just the last four weeks, said Mark Zandi, chief economist at Moody’s Economy.com.

Less than a month ago, Nigel Gault, chief domestic economist at Global Insight, a forecasting service, predicted that domestic economic output would rise 1.2 percent in the third quarter. “At the moment I’m running close to zero,” he said, “and maybe a negative.”

Of course, the economic malaise has not yet hurt all businesses. It has even been good for some.

Entertainment and media executives remain optimistic about sales of movie tickets, DVDs and games. At Nintendo of America, the popular Wii video game consoles are still selling briskly at about $300.

“My view is that when consumers get concerned about their nest egg, or their country, they need entertainment,” said Bo Andersen, president and chief executive of the Entertainment Merchants Association, which represents distributors and retailers of home entertainment products.

And as fewer people eat at restaurants, food is flying off the shelves at grocery stores. David Driscoll, a stock analyst for Citigroup, said the shares of big food companies have risen about 17 percent this year. By contrast, he said, the restaurant sector is down 4 percent.

“The alternative of restaurants is buying groceries and eating at home,” he said, “and right now, that’s an attractive alternative.”

Daniel Kimble, 31, was putting Mr. Driscoll’s theory into practice on Friday. An independent trucker from Oklahoma, he stopped his rig outside a Wal-Mart in Cleveland on his way to a nearby factory.

Mr. Kimble ticked off a long list of his money-saving steps, from driving his pickup truck less to using less laundry detergent to buying fewer clothes. And he has stopped eating at restaurants on the road, which is why he was parked at Wal-Mart.

“I’m going in to buy some lunch meat and some bread, whatever’s cheap,” he said. “I’ve got to save money, you know?”
Household net worth decreased by $1 trillion in the last 4 weeks alone. It's no wonder consumers aren't spending.

Originally posted by Colon™
Consumer credit shrunk an annualised 3.7% in August. Couldn't be arsed to fact check but that's the first I've seen that measure in the negative territory (ie: in the past decade at least). Bankruptcies, maybe? Although that percentage in a negative direction seems pretty high. If that's a US number, that's tens of billions right there, since total consumer debt (less houses) exceeds $1 trillion, maybe by a lot. Hmmm. http://www.discussworldissues.com/fo...smilies/hm.gif