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alstry (35.92)

From Massive Consumer Economy to Savings Economy....

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September 24, 2009 – Comments (1)

When you are primarily a leveraged consumer economy dependent on credit to drive your economy.....and are forced to change to a savings economy.......the changes will be very convulsive.  Since revenues in America were based on consumer spending.....and consumer spending was based on access to credit.....when you cut off credit......you cut off spending......and sales and income evaporate for all.  If the cities, counties, states, hospitals, schools, businesses and families have leverage and or expense levels set to a consumer economy.....it is impossible to meet obligations once revenues evaporate due to job loss, wage cut or decrease in revenues.

This trend is what Alstrynomics is analyzing and the trends is accelerating.....

Citigroup Inc., one of the biggest recipients of government bailout funds, is looking to scale back its U.S. retail footprint to just six major metropolitan areas and limit most lending to wealthy customers, according to a published report.

Citi's management is looking to reduce the bank's U.S. consumer lending to mainly credit cards and "jumbo" mortgages, The Wall Street Journal reported Wednesday, citing unnamed people familiar with the situation.

The New York-based bank's executives are expected in October to present plans to the board of directors to pare Citi's retail branch network and concentrate mainly on the New York, Washington, D.C., Miami, Chicago, San Francisco and Los Angeles areas, the paper said.

MASSIVE CUTTING AND SLASHING TO EVERY ASPECT OF THE ECONOMY IS THE CONSEQUENCE WHEN YOUR CUSTOMERS STOP SPENDING BECAUSE THE BANKERS STOP LENDING

Luxury Hotels in U.S. Risk Default as Recession Leaves $850 Rooms Empty

It is not just the revenues to businesses that evaporate...it is revenues to cities, states, counties, hospitals.....as a result, the salaries that most of us are making in the consumer economy are simply not sustainable in the savings economy.

If we are going to be forced to restructure the economy, we must restructure the debt...but simply bailing out the bankers and letting the rest of the nation fail is insane.

1 Comments – Post Your Own

#1) On September 30, 2009 at 11:25 AM, kirkydu (95.42) wrote:

Al, you are prolific if nothing else.  Your posts are very good.  I agree re consumerism being in first gear for quite awhile.  I would be surprised if the U.S. gets back to near previous consumption before the echo boom has their kids en masse.  The developing world, while building their nations, are not near being big consumer groups to be relied upon.  The 20teens will be choppy, but that will present those with cash and forsight a great ride down the road for themselves and their families.

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