2nd year of negative saving for Americans. - Americans' Debt: Why Keep Digging Deeper Holes?

http://www.courant.com/news/opinion/op_ed/hc-diuguid1101.artnov01,0,4011796.story
Americans' Debt: Why Keep Digging Deeper Holes?
LEWIS W. DIUGUID
November 1, 2007

Saving for rainy days has become one of those nostalgic things that people's grandpas did. The Commerce Department reported earlier this year that the savings rate for 2006 was a negative 1 percent. That means people dug into their savings and increased borrowing to finance what they bought.

The poor savings rate for last year was lower than the negative 0.4 percent in 2005. The Commerce Department reported that 2006 was the worst since the negative 1.5 percent savings rate in 1933, during the Great Depression.

The side effect will be that consumers will borrow even more money, seeing the lower interest rates. They'll keep up with the Joneses all right, right up until the debts are due. Then they have no choice but to accept that they aren't the Joneses and never can be, not under the current environment.

The alternative to digging a bigger hole is to live out on the street. what are folks supposed to do? :shrug:

to purchase necessities (food, et cetera)

The price of everything is exceeding the earning capabilities of people by leaps and bounds and that doesn't even take paying medical bills into consideration. How many deductibles, co-pays and denied claims are put on VISA? It's false to think we're all going on Hawaiian vacations and buying big screen TVs. Until the mentality of this country goes back to "we" rather than "me," lots of people are getting necessary dental care thanks to their ability charge it.

Parteeeeeeeeeeeeeeeeeee!

Whoooo:woohoo:

People have got to do something. For years people got the big cars, the big houses and the big accessories, wanting to live the good life. They put this lifestyle on credit, bought the car with zero down, same with the house with the addition of an ARM, and cashed out their house via home equity loans. Now the piper wants his due, and these people have their backs against the wall. Therefore instead of putting the toys and trips on plastic, they're now putting gas and food on plastic, desperately trying to keep their heads above water, trying to keep all those plates spinning. These people, and sadly there are a lot of them, are just one gentle nudge away from complete collapse. Prices go up much more, their house payment goes up, there's an emergency, any, all of that and more and we're going to watch an entire social sector go from relative princes to paupers. Even sadder than watching this however is the fact that the idiotic actions of this group of people, their unwise, foolish need for bigger, better material things, for their insistence of living the lifestyle of the rich on borrowed money could very well bring our entire economy down with them. I have little sympathy for these people, because most of them brought this madness on themselves, yet it will be the rest of us who have to pay for their stupidity.

has reported repeatedly about American households negative income after they perform their surveys.

A similar report is here.

It's as if the American society is so busy trying to stay ahead of their own impending doom they are not aware of the massive robbery in their towns, states, and federal government.

Distortion in the consumer price index is a good place to start investigations.

edit: To say Americans are not saving is similar to the cover for subprime robberies when it was alleged that the poor Americans thought they were getting something for nothing.

As time goes on, we learn that it wasn't the poor Americans trying to "trick" the honest mortgage broker.

Why should we allow the question to be framed this way?

And haven't been since oh, around REAGAN? Possibly before?

Here's a couple of examples:

I get a few items at the grocery store. Not the usual trip to the grocery store, but a few items for maybe two or three days worth of supper. This will now cost 40-50 dollars, when before it would only cost 15-25 at best. Regularly, it's 3.50 for milk, and I have it easy compared to the rest of the country. Bread - 2 to 3 bucks a loaf.

Also, when you live on the cheap, sometimes that "cheap" will hit you in the form of an unforseen triple digit expense at a time when you can ill afford it. Example - I have no car payment, haven't had one for 5 years. I'm driving and HEY, the muffler's bracketing rusts off, there's a hole in my muffler, and the pipe is rotting! $360, please. I mean, yes I got my money's worth out of that, but again, this happens at the most inopportune time - when we just finished paying the mortgage, paying her car payment, paying the semi-enormous credit card bill most homeowners like us are saddled with from day one, her student loan, etc.

Multiply this BS by every single month and you'll know why Americans in general are facing too much month at the end of the money.

One of the worst things that could happen to the American economy would be for people to stop spending and start saving, it would trigger an immediate recession. If the government wanted people to save it would treat interest income the same as investment/capital gains income.