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fooluser17 (< 20)

Bush: "I encourage you all to go shopping"

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November 12, 2008 – Comments (7)

I'm furious.

I've spent my whole life spending frugally, the past few years especially so.  I desperately wanted a new car.  I couldn't afford it, so I kept the one I had.  I wanted to buy the latest fashions, and to go out to dinner at the trendiest restaurant.  I couldn't afford it, so I didn't.  I wanted an SLR camera to satisfy my photography habit, but the cost was just too high.  I got a hand-me-down second-rate camera instead.  I haven't bought myself a pair of shoes other than a pair of sneakers to replace my old pair that had holes in them.  I ordered them over the internet at a discount.  While others spent $3.00 on their morning coffee, I ate a $0.25 granola bar.

I was so worried about spending because I saw others spending more than they possibly could.  I had read the statistics.  Americans saving a negative percent of their income.  The average family carrying a large balance on a credit card.  Mortgages and home equity loans increasing.  "We" were borrowing and borrowing, and it was unsustainable.  When we finally couldn't spend anymore, the businesses that had benefitted from those who had been making a habit of spending more money than they were making would see major drops in income.  I saw the economy headed for disaster.

That's why I decided to start watching the stockmarket, waiting.  I noticed articles from this site while I was watching the markets, so I wandered over here and decided to join.  I joined over a year ago, and made many of my picks (such as WalMart) because I was waiting for the economy to crash.  And it did.  And the taxpayers bailed out big business to the tune of $3.5 trillion dollars.  I might as well have made the same stupid choices as everyone else, because my money's going to pay for it.

But what makes me more furious than the stupidity that led to this crash is the stupidity that's following it. A WSJ article posted to Yahoo Finance made me sick reading it.  The author talks about how "we" changed our definition of want and need.  "We" upgraded from Timex to Rolex and bought $800 Jimmy Choos, and even those who aren't worried about their finances have decided to do the responsible thing and stop spending money.  Wait, what?  Many people made fun of Bush for encouraging us to go shopping to support the economy in the recession of 2001-2003.  However, he was right. 

The article highlights the situation of a woman named Mindy Gail.  She, until recently, had clothes in her closet she had never worn, tags and all.  Then some of her friends lost their jobs, and one of her friends who owns a restaurant said she might even have to close it.  So Mindy Gail, and her parents, are understandably worried.  Mindy Gail has cut back her shopping, saying that "When I see people around me who are struggling and frightened, it really doesn't feel like a good time to shop.  It's not appropriate."  And of course, Ms. Gail's parents, who had been living in retirement comfortably, have stopped dining out.

Reading about this kind of logic is what makes me furious.  Mindy Gail's comfortably retired parents stop dining out.  Ms. Gail's friend may have to close her restaurant, because not enough people are dining out.  And because Ms. Gail's friend may have to close her restaurant, Ms. Gail cuts her spending out of fear, leading to more businesses closing and more fear.  It's a vicious cycle, and I'll say it here and now:  Bush was right.  Go spend money.  Don't feel guilty about spending money, as the article implies people are.  Feel proud.  If you have it to spend, go to a locally-owned independent business, like a family-owned restaurant, and support your local economy.  The economy is the way it is because people have stopped spending money, not because spending is an irresponsible decision.

7 Comments – Post Your Own

#1) On November 12, 2008 at 12:04 PM, columbia1 wrote:

But you can not spend what you do not have, and now that credit is nearly impossible to get there is nothing left to spend.

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#2) On November 12, 2008 at 12:14 PM, fooluser17 (< 20) wrote:

The point of what I was saying was that:

1) People should never have spent what they did not have.

2) If you need credit to buy it, and it's not a house, an education, or a car, you can't afford it (home equity loans to buy things you can't afford like clothing do not count under the "a house" category)

3) There would be something left to spend had people looked at the lessons of the past and looked objectively at what was happening and their own behavior and not been so irresponsible, leaving responsible people with the tax burden for bailing out the companies failing because of the economy that those people messed up.

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#3) On November 12, 2008 at 12:14 PM, TDRH (99.49) wrote:

It is like the grasshopper and the ant, but the grasshopper dies in the story, he does not get 850 billion bailout,  or relief from a resetting ARM. 

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#4) On November 12, 2008 at 12:23 PM, Gingerbreadman55 (25.88) wrote:

"It is like the grasshopper and the ant, but the grasshopper dies in the story, he does not get 850 billion bailout,  or relief from a resetting ARM. "

Boom. Awesome statement.

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#5) On November 12, 2008 at 12:55 PM, FourthAxis (< 20) wrote:

It may suck now, but you'll be rewarded. 

As for going out and spending.  Not too many people know what type of spending will make things better (supporting local and national companies) and what type will make things worse (buying consumables from China).

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#6) On November 12, 2008 at 5:00 PM, Imperial1964 (98.29) wrote:

In the last recession I didn't have anything to spend.  I was in college and could barely afford tuition and gas.

In the meantime I followed the old farmer's saying, "Make hay while the sun shines."  I bought a house and paid it off.  I bought reliable transportation (read: old cars that still run good), and a handful of toys. :)  The only thing I went crazy on is the 1964 Imperial convertible. :D

I made good use of the time to get my finances in order and start funding my retirement accounts.

Since the downturn started, I have been spending.  New garage.  Complete remodel of the house--inside and out.  All the new tools I used to want but couldn't afford.  And I almost forgot: buying stocks.  And all of it with cash.

Next year I'll still be spending boatloads of money, but only on stocks.  I already have everything else I want.


What I'm saying is, despite how some people feel now, you're rewarded for being responsible.  When you don't waste money and don't have debt, you'll be blessed accordingly.  While a couple of my friends keep getting bailed out by her dad every few months when they can't pay their bills, I could live comfortably off minimum wage now if I had to.

What frustrates me is people who are as bankrupt as GM, but think they need a 4-wheel-drive SUV, a newer car, a boat, a big TV, and cigarettes.

As you said, there is nothing wrong with spending now if you can afford it.  Just spend smartly.  Is buying a Nintendo Wii on credit smart?  No.  Adding some insulation to your attic?  Yes.  Buying a new car?  For the first time ever, I'd say maybe.

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#7) On November 12, 2008 at 5:29 PM, fooluser17 (< 20) wrote:

Thanks for the response, Imperial.  I too am in college and can barely afford to do much, but I saw the economy building up to this and started picking stocks to buy after a drop.  I have been investing and collecting dividends for a little while now. 

I got the same credit card offers in the mail as everyone else who spent themselves into debt.  I chose not to buy what I didn't have the cash to pay for, using the cash back only as a bonus for my self discipline in paying them off on time.  Others bought things they couldn't afford, and are now paying astronomical interest on their cards, while I make a decent percentage in dividends in the market.

What it comes down to is that while others bought themselves one heck of a headache, I bought myself somewhat of a future. 

How much of one will be determined by whether the government is actually accountable for telling us just who it gave all that bailout money to (Bloomberg is suing under the Freedom of Information Act to find out).  Trillions of dollars, literally, in taxpayer money, and we're not allowed to find out who cashed the check?  Paulson held the economy at gunpoint, saying the world would end if we didn't write him a $700B blank check.  We're now at an $850B check plus $2T.  We're broke, and we can't afford it.

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