The Consumer Spending Problem Wall Street Doesn't See Coming

RE:The Consumer Spending Problem Wall Street Doesn't See Coming

andrew — Wed, 30 Jan 2008 13:00:00 GMT

Don't any of you kid yourselves there is only ONE way that we are even close to willing to use to solve this problem and it is inflation. We have 1.3 Trillion dollar external debt ( China and Japan) we Have a 13 TRILLION internal debt and there is no way an undisciplined populace such as we are,are we going to put up with the pain and angst and pathos that a fair and honorable resolution would require. Germany in the 30's some African countries now and others have had the outrageous inflation where printing million dollar bills seem to be the answer ANDY

RE:The Consumer Spending Problem Wall Street Doesn't See Coming

Steve — Wed, 23 Jan 2008 13:00:00 GMT

I completely agree. Isn't it interesting to hear all the talk about lowering interest rates to jump start the consumer spending. Really! We want over indebted consumers to go out and spend more and the government will even give us some $145 billion back to go spend at the mall. Also interesting that there isn't a peep of talk about new solutions for people to use to deal with problem debt. No preparation for consumer debt crisis as well. Crisis, what crisis? Consumers may be dumb, but they aren't stupid.

RE:The Consumer Spending Problem Wall Street Doesn't See Coming

Danloan — Wed, 23 Jan 2008 13:00:00 GMT

You are right on it. The pivotal question is 'how much of the money fueling the recent economy came from those equity lines and cash out refinances'? The answer is, most of it and with no equity left in the houses, equity line finance offerings gone, loan and appraisal guidelines tightened the fun is just beginning. We have been drunk on cheap money, cheap oil and cheap corn and the party is over. I only wish we had an administration more interested in solving problems than in milking them. Is creating inflation the answer? The sad truth is that there are real solutions that most mortgage professionals could innumerate that would resolve at least the mortgage side of this equation. Much of what is happening though, as you point out, is bigger than can be addressed through any one industry. The markets will adjust, we will survive and we will hopefully have learned something. Meanwhile we need to get used to the idea that the money that drove the growth of the past few years is gone.