The [tag]subprime mortgage[/tag]/housing/credit/crisis–or, SPMHCC–is fast becoming the [tag]subprime[/tag] mortgage/housing/credit/consumer confidence crisis–or SPMHCCCC, for short. Okay, it’s not so short but it does get the job done.
Anyway, a full 70 percent of this nation’s economy comes from personal consumption-Americans buy TV’s they don’t really need, cameras they don’t really need, newer cars they don’t really need, designer clothes they REALLY don’t really need and the list goes on, but we don’t really need to go there, do we?
And how do many Americans pay for all this stuff they don’t really need? In recent years, they basically used their homes as giant ATM cards with storm windows. The house was not only a roof over their heads, it was also a credit card just a bit too bulky to carry around.
But, now, the SMPHCCCC (See first graph for full explanation) has all but shut down this stream of income and that appears to be, in large measure, what is turning off the spigot of America’s needless over [tag]consumption[/tag].
The evidence: The Pew Research Center (yes, an unfortunate name) says its polls indicate [tag]consumer confidence[/tag] is now at a 15 year low.
The New York Times reports that even high end stores are reporting slowdowns in growth.
And, worse still, says the Times report: “The abrupt pullback raises the possibility that the country may be experiencing a rare decline in personal consumption, not just a slower rate of growth.”
The report says that would be the first time that has happened since 1991.
That would, without doubt, ram our [tag]economy[/tag] into a [tag]recession[/tag] if it isn’t already there? Some economists think it is.
Take a look at just one example: the merged Sears and Kmart. Sears Holding says today that its profits are expected to plunge 60 percent this quarter compared with last year.
The subprime mortgage crisis has shattered the world’s economy in myriad ways. There isn’t a country in Western Europe that is not feeling the credit pinch from it. And, in this country, the situation promises to get a lot worse before it gets a lot better.
Doom and gloom? Fire and brimstone talk?
Wish it were, but it is not!
Is there a fix?
Congress is talking about some sort of relief for [tag]homeowners[/tag] who are about to go belly up..but Congress talks about lots of things and often does too little way to late.
President Bush has finally realized that he actually is the captain as the Titanic rams the iceburg and he can’t blame his first mate, the VEEP, for this one.
Americans like to think that if they pulled themselves up by their own bootstraps, things will get better. But, there are things beyond the ability of any individual to correct. This [tag]economic crisis[/tag] happens to be one of them.