Once in a Lifetime - American Consumers' Dealers No Longer Dealing Dope (Credit)?

B

ByLoSellHi

And you may find yourself behind the wheel of a large automobile
And you may find yourself in a beautiful house, with a beautiful wife
And you may ask yourself-Well...How did I get here?

And you may ask yourself
Where is that large automobile?
And you may tell yourself
This is not my beautiful house!
And you may tell yourself
This is not my beautiful wife!

-Talking Heads, David Byrne lyrics to Once in a Lifetime

Another gem by James Quinn:

James Quinn is senior director of strategic planning, the Wharton School, University of Pennsylvania.
James has held financial positions with IKEA, Toll Brothers and the Wharton School in his 22-year career. Those positions included treasurer, controller, and head of strategic planning. He is married with three boys and is writing these articles because he cares about their future. He earned a BS in accounting from Drexel University and an MBA from Villanova University.

I don't know if the author is correct in his conclusions, or not (Landis).

But this article is fantastic inasmuch as it stimulates a great debate on some very fundamental questions that have implications for the markets:

The Great Consumer Crash of 2009
by: James Quinn posted on: August 14, 2008 |

“It is easy to ignore the storm if you look at the opposite horizon. When the storm reaches your location there can be no more ignorance.”

I hate to tell you, but the storm has reached your location and it is a Category 5 hurricane. The levees are leaking. Ignore it at your own peril. The 6,000 sq ft McMansion buying, BMW leasing, $5 Starbucks latte drinking, granite countertop upgrading, home equity borrowing days are coming to an end. The American consumer will not go without a fight.

For the last seven years the American consumer has carried the weight of the world on its shoulders. This has been a heavy burden, but when you take steroids it doesn’t seem so heavy. The steroid of choice for the American consumer has been debt. We have utilized home equity loans, cash out refinancing, credit card debt, and auto loans to live above our means. It has been a fun ride, but the ride is over. We can’t get steroids from our dealer (banks) anymore....

Read article here:
http://seekingalpha.com/article/908...-2009?source=front_page_most_popular_articles
 
Oh come on?

No one thinks the author is brilliant?

Or a quack?

No one feels compelled to comment on a very thorough (whether it's proven ultimately correct or not) analysis?

I found this to be the single best article I've read in a year.
 
Quote from ByLoSellHi:

Oh come on?

No one thinks the author is brilliant?

Or a quack?

No one feels compelled to comment on a very thorough (whether it's proven ultimately correct or not) analysis?

I found this to be the single best article I've read in a year.
More...

i think everyone here on ET has already heard enough of this crap, whether fact or fiction it is getting boring talking about the same crap over and over again

the whole world is mismanaged in almost everyway, but do you see it changing for the better?! no, you know why? because it is consistent with the human nature. Does that tell you something about the human nature, yes it does, humans are pretty fucked up entities. This has never changed and it will never changed, humans are shit that think they are the shit. They have this thing called pride, you can't take it away from them, because that is all they are. The people who run the major systems of this world, are not only not smart but pretty stupid and sick motherf_krs, but that only gives you a glimpse of how f_kng stupid the people under their rule are.

think of it this way; what is money?! some of it is in the form of papers and coins, most in the form of digits stored in various databases. How are these papers and digits so powerful, able to purchase almost anything, there must be a power behind them, or else you too would create your own currency. A power that can force you and billions of others to accept, use and eventually crave that currency. Only the power of dominance, monopoly, might as in military might and fame can force it down billions of f_kng slutty throats.

so, so long as america is the most powerful country in the world military wise, stop worrying about the economy of america. These cycles are most likely purposeful and are created because the founders and those who run this country have figured that movements are in cycles, and without movement there is no life, that it is cycles like day and night, winter and summer, that turn the gears of life, and so they decided to run the country like this, democrats and republicans, economic prosperity and recession, hope and fear, get the picture? Only cycles can create the illusion of life and hold the mind bound to it.
 
It was a well written article based on mainstream thoughts about the economy. I disagree with most of the authors points on how we got to where we are but this changes nothing in the present but we need to change how our economy is regulated to get out of this mess.

For instance, regarding store closings, so what, many were fad businesses with shit customer service and deserved to die. Malls were dead long before this bubble. Business wanted real estate and more control over operations which Malls couldn't compete with.

Fixed costs in business made it necessary for chains to open more stores (the old adage, "no profits, we"ll make it up on volume syndrome), the systemic problem is over regulation (ie. zoning etc.)of business.

McMansions? For many that was the only tax shelter. Not the greedy American that is portrayed in every sour grape commentary.
 
Excellent article ByLoSellHi. Thanks for sharing it with us. I also didnt know this website, played with it for about an hour; new addition to my fav list.

Quote from nutmeg:

It was a well written article based on mainstream thoughts about the economy. I disagree with most of the authors points on how we got to where we are but this changes nothing in the present but we need to change how our economy is regulated to get out of this mess.

For instance, regarding store closings, so what, many were fad businesses with shit customer service and deserved to die. Malls were dead long before this bubble. Business wanted real estate and more control over operations which Malls couldn't compete with.

Fixed costs in business made it necessary for chains to open more stores (the old adage, "no profits, we"ll make it up on volume syndrome), the systemic problem is over regulation (ie. zoning etc.)of business.

McMansions? For many that was the only tax shelter. Not the greedy American that is portrayed in every sour grape commentary.
More...

My opinion is that eventhough your comments may explain the crisis, they surely do not make the future any brightier. For instance, it makes me wonder why there was so much "fad businesses with shit customer service and deserved to die" in the first place and how these and other deaths are going to affect the national income and the whole economy in the long run.
 
thesharpone wrote some very profound words..
"Only cycles can create the illusion of life and hold the mind bound to it."

Repetition is the key to creation. Cycles within cycles.
 
Thanks Trend,

I did watch the video and will look at his book for more depth on his ideas. We do have effeciency in gov't, we can find the one cow that has mad cow disease of out of hundreds of thousands. We can locate the tomato with e-coli that ends up on the grocery store shelf. So, apparently we are able to be efficient but do we want it? Nazi Germany was efficient, the historical how to is there, so systems are capable but people just don't want it or care enough. Imo, people don't want it. People may scream about waste of taxpayers money but a little is ok.
 
Ok Nutmeg, I thought this man seemed sincere and honest from the video. I understand cycles too. But it looks like people are saying capitalism has gone out of control, so far that money being spent (is borrowed money) but there is no money to pay it back. It does not exist. Maybe people have the material things that the credit bought them, but someone else does not get payed when there is no money to pay the debt. So is this like other cycles, and will get better with time, or is this something so big and new created from derivitives that went out of control?
I want to read his book too.
 
The basic point that all but the myopic have to admit is that there was too much debt taken out on over-valued assets (those same assets are now being deflated), and that debt was inefficiently allocated towards capital.

There is now a massive aggregate debt that can't be paid back.

So, we need destruction of capital on a massive scale, in order to flush out the toxins, and to begin to lay the foundation for a more orderly and efficient outlay of wealth building capital.

But who will pay the price tag for the destruction of capital that is necessary?

As you can see already, it will be those, with a few exceptions (like Bear Stearns and some of their employees), who saved and acted prudently.

Savers will get punished while those risking OPM will actually be financially enhanced.

Bernanke & Co. will see to it that those most responsible for the inefficient spending orgy of the last 6 years are bailed out with taxpayers paying the price of their excess.

That is stark reality.
 
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