Rotting Pinata
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The party's over, folks.
I came across a rather detailed, eloquent, and easy to understand explanation of the current 'sub-prime' fiasco. Being that I work in the finance industry, I've been dealing with a lot of the back-end issues regarding it. Not the "OMG we're losing our house!" issues, but the "OMG we're a bank and we don't have any money" or the "OMG we're a pension plan and the AAA rated bonds we bought are worthless" situations. Suffice to say, it's not happy time. And before you start pouncing on me for being a vulture, remember that (a) I didn't buy any of these things myself, and (b) I tend to stay away from math that I can't explain myself. But I digress.
The party that I am referring to is the one that many people, including myself, have engaged in. It's the "I can pay for it later" mentality. I am not saying that credit is bad. In fact, I am saying that credit is fantastic. It's the reason I own a home, that my wife was able to get a new car recently (since her last one had horrible gas mileage), and other stuff. But we consume FAR more than what we can afford. Environmental aspects aside, we simply spend more than what we make. Consistently. And while the basic idea of "I'll have more money later" may be correct, the fact that we continually do this defeats that point.
Many people are getting a tax rebate check soon. And the government has flat-out said that they DON'T want you to pay off debt or (gasp!) save it, they want you to spend it. On crap you don't need. Most likely made in another country. Granted, I have already spent mine. When my truck was broken into, I had to purchase a new laptop. And I'll further admit that I like gadgets as much as the next guy. But when we spend money we don't have, on shiny crap we don't need, then all hell breaks loose.
So how's that iPhone look now?
Face it: we're all basically consumer whores. The only difference is what we whore about. I love cigars and computer-geek stuff. My wife has a fetish for office supplies and shoes. My dad just likes gadgets that do stuff. And another friend is a vinyl record nut. So we all do it. And there's nothing wrong with it. But to believe that it's genuinely OK to spend money you don't have? Not so much. My grandparents (and parents, for that matter) had the old thinking that "if you can't pay cash, you can't have it" when it came to the non-essentials. While obviously if the washing machine breaks at a random time, and you have to replace it, hello Home Depot card! But what's another gizmo that'll just collect dust with the other gizmos?
I came across a rather detailed, eloquent, and easy to understand explanation of the current 'sub-prime' fiasco. Being that I work in the finance industry, I've been dealing with a lot of the back-end issues regarding it. Not the "OMG we're losing our house!" issues, but the "OMG we're a bank and we don't have any money" or the "OMG we're a pension plan and the AAA rated bonds we bought are worthless" situations. Suffice to say, it's not happy time. And before you start pouncing on me for being a vulture, remember that (a) I didn't buy any of these things myself, and (b) I tend to stay away from math that I can't explain myself. But I digress.
The party that I am referring to is the one that many people, including myself, have engaged in. It's the "I can pay for it later" mentality. I am not saying that credit is bad. In fact, I am saying that credit is fantastic. It's the reason I own a home, that my wife was able to get a new car recently (since her last one had horrible gas mileage), and other stuff. But we consume FAR more than what we can afford. Environmental aspects aside, we simply spend more than what we make. Consistently. And while the basic idea of "I'll have more money later" may be correct, the fact that we continually do this defeats that point.
Many people are getting a tax rebate check soon. And the government has flat-out said that they DON'T want you to pay off debt or (gasp!) save it, they want you to spend it. On crap you don't need. Most likely made in another country. Granted, I have already spent mine. When my truck was broken into, I had to purchase a new laptop. And I'll further admit that I like gadgets as much as the next guy. But when we spend money we don't have, on shiny crap we don't need, then all hell breaks loose.
So how's that iPhone look now?
Face it: we're all basically consumer whores. The only difference is what we whore about. I love cigars and computer-geek stuff. My wife has a fetish for office supplies and shoes. My dad just likes gadgets that do stuff. And another friend is a vinyl record nut. So we all do it. And there's nothing wrong with it. But to believe that it's genuinely OK to spend money you don't have? Not so much. My grandparents (and parents, for that matter) had the old thinking that "if you can't pay cash, you can't have it" when it came to the non-essentials. While obviously if the washing machine breaks at a random time, and you have to replace it, hello Home Depot card! But what's another gizmo that'll just collect dust with the other gizmos?
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...which is why (in a normal year) one would look into purchasing Walmart stock around this time of year, or the quarter before, so as to benefit from this.
We may be broke, but at least we're driving BMWs!