The American Dream Is Dead: The Bursting Of The Consumer Bubble

We’re Spent

By DAVID LEONHARDT

I often expressed my ultimate amazement here on the forum when I read that in America, some people actually pay their groceries with a creditcard...

The thought alone makes me want to go bonkers!

The very notion of that the "foundations of the American economy aren't strong" -- they just aren't -- begs me to ask the question: what now?

The usual mantra of tax-cuts, in the hope of people pumping it in the economy via consuming -- if it would work (which it doesn't) -- would only work on the short-term and doesn't address the very fact that the American economy is built on sand.

 

I don't agree the American Dream is dead. Oh, it's on life support in intensive care, but not dead. Not yet.

Plenty of people would like to live the dream, if only they knew how.

That's why we need more successful people. People need real live successful role models to copy.

The most compassionate and practical thing anyone can do for society is to succeed in his endeavors. That way people can have an example to follow.

 

Do you believe everything you read? Sounds like wishful thinking on your part..a little bit of across the pond envy??

 

Couldn't disagree more that cutting taxes doesn't pump up our economy. The opposite of tax cuts of course are tax increases. What happens to our economy when you increase taxes is that big businesses cannot afford the regulations that come along with the tax increases, and they cannot afford to pay their workers their expected wages (let alone giving workers raises or promotions), and so they either sit on the trillions of bucks they now have in fear of taxes and regulations or they put their money in foreign banks, or they invest overseas at least or until they see a softening of the stateside restrictions, i.e. with the ousting of our current socialist president.

 

Subsidizing stupidity and punishing success will ultimately destroy any social construct.

Thank a leftist.

 

I don't know why this is so "amazing".
My parents don't put money in my bank account, but they do pay my credit card bill. So food goes on credit card.

 

Exactly my point.

Everyone over here has a debitcard -- when your turn 18 y.o. you are invited at the local bank office of which you are a member of. In my case: ING.

There you meet up with the same person who issued you your first debitcard (we just call it a "bankkaart" or "bank card") and they ask if you want to block the option of "going in red".

Everyone I know has blocked that option -- so you can't spend money you don't have.

The only stuff that is ought to be paid on credit is a house and a car -- and maybe big appliances like a refrigerator, washing machine or a dryer.

Paying gorceries with a creditcard is just absolutely bonkers.

People only tend to have a creditcard when they hit their mid-to-late twenties.

I don't have a creditcard and I don't plan on having one soon either.

 

What about the Boat, the Jet ski, the Motor Cycle, the timeshare in Colorado and the kids college tuition? You Euros don't know how to live it up at all.

 

I have a debit card. I think most people over here have a debit card.
I'm still not understanding what's "bonkers" about putting food on a credit card.

 

They have their uses if you are able to manage your finances.

You could pick a non annual fee credit card that offers cashback or some kind of reward and pay it off regularly by the pay date and so not pay interest on your expenditure. You only need to ensure that your bank account has the funds and as you don't overspend (as indicated by the use of your debit card remarks) you can benefit.

 

You are indeed correct, janpor.

Especially when you say, "But the real culprit — or at least the main one — has been hiding in plain sight. We are living through a tremendous bust. It isn’t simply a housing bust. It’s a fizzling of the great consumer bubble that was decades in the making.

The auto industry is on pace to sell 28 percent fewer new vehicles this year than it did 10 years ago — and 10 years ago was 2001, when the country was in recession. Sales of ovens and stoves are on pace to be at their lowest level since 1992. Home sales over the past year have fallen back to their lowest point since the crisis began. And big-ticket items are hardly the only problem."

The question is, "Why can't Obama and Tim Geithner create jobs like other presidents and treasury secretaries have done in the past?

It has become very apparent that most of the liberals in this group are very misguided and downright wrong when it comes to increasing U.S. corporate taxes and at the same time bringing back to our nation millions of jobs that have been outsourced to China.

As a matter of fact, they are so misguided, even President Bill Clinton does not agree with them! I should also note he has been very critical of the failed economic policies of Barack Obama!

Please check this out.

"Fourteen million Americans remain out of work, a waste of our greatest resource. The 42nd president has more than a dozen ideas on how to attack the jobs crisis."

 

I don't either, as long as the bill is paid every month. My grandfather pays for EVERYTHING with a credit card and has perfect credit as well as enough cash to pay for what he buys. He simply pays the bill every month. The credit card offers him more protection than a debit card would which is why he uses it.

I also find the notion that not a single person in all of Europe has ever paid for groceries with a credit card to be far-fetched to say the least. I think our friend, janpor, needs to get out of the house more often and quit being so naive.

 

...

Econ 101 for SiliconMagician: "timeshares" are the biggest rip-offs ever.

(LMAO! with the location... Colorado. LOL! That's hilarious!).

My father has two Harley's and I told him I think it's just ridiculous -- and that could be placed under "car" or whatever. Stop trolling.

Buying a jet-ski? For what? To be able to drive it 2x or 3x a year for 30min? That is just the wast we are addressing here... Better rent one on location, e.g. Barbados, Crete, Corfu, etc.

The consumer bubble in America has burst.

It aint returning, SiliconMagician.

And, wtf, college tuitition on credit? That is just out of this world!

 

Uhm, I'm talking about day-to-day groceries. You don't buy that with a creditcard. That's just ludicrous! LOL!

However, I think it's pretty normal when it's Christmas time and you go on a super-mega-groceries trip, that you pay with your creditcard since it's possible the bill is well over $1000 or something.

 

My grandfather does that very thing. What's so ludicrous about it? It's cheaper and easier for him to do it that way.

What??!! Europeans use credit cards when going on super-mega-grocery trips? I find that to be ultimately amazing and bonkers! Europe is clearly about to die a horrible death.

 

Also, you need good credit if you ever want to be approved for a mortgage/car loan.
Building good credit is pretty important.

 

I think you and I are just opposites, haha.
If it's a major/expensive purchase, I feel more comfortable using cash. If it's smaller day to day stuff, I just use my credit card.

 

I'm not religious, but credit cards are tools of the Devil my friend!

 

I am opposite to everybody... I even don't have a credit card. I refuse to have it. It sometimes is problematic, but I don't want anything to credit. I don't want any debt. I pay everything in the moment or I don't buy it.

I always live according to my adquisitive power and always putting my top of spending of the half of the money that I have at the moment.

 

Paying for groceries with a credit card is perfectly fine. Allowing excessive debt to accumulate on credit card accounts is the real problem. It becomes a horrific problem if the person does not have reasonable means to eventually pay off the debt.

IMO anyone can find a great life in the USA today. The problems come in the mismanagement of our fiscal decisions. Without going into details, IMO if a person is not setting aside 25% of their monthly/annual income, they are making unnecessary and reckless fiscal decisions.

What the 25% required savings scenario does is force people to live a more sustainable and enjoyable life. Instead what most of us do is spend 100% of our income plus another 10-15% of credit debt. Only an idiot cannot see that living this type of fiscal life is high risk!

The entire nation, and the citizenry, seem to be hung up with the idea that they are entitled to more than they actually can earn/afford. Houses are too large, cars are always new, discretionary spending is out of control, and few are ever denied anything because they simply pull out the credit card.

The best possible thing parents can do for their kids today is educate them about fiscal management. And the goal is not to be cheap and miserable but to make better decisions about achieving equal happiness with much less financial risks...

 

Actually many people are living it. It may have been taken away by a bad economic climate but some at the top were not there by birth. They wroked. There is still a chance for the american dream.

 

This is a false view of the "American Dream"

The American Dream was never to "get rich"

It was to own some property, a car, a few electronic goods and the ability to send your kid to college and for that requires a lifetime of hard labor, both to achieve and to maintain it.

That is all any American should ever expect.

 

Your own country's economic dynamo looks a lot like the US numbers so what's your point? Of course your numbers will likely look worse than ours whey ya'all have to open your wallets and bail out Greece, Portugal and who ever else wants some. Instead of worrying about us, try worrying about Belgium ya don't even have a real government.

 

@Professor Peabody

LOL!

My country is growing faster than yours despite the fact that because of faster population growth the US needs to grow +1% faster than us. Belgium is doing remarably well.

We have lower unemployment and even lower debt than the USA! That's how crappy the USA has become: it is even doing worse than Belgium...

 

The American Dream is the final culprit, but America is not the only one harboring this fantasy. And the fantasy is precisely that every generation will do better than the last. This concept of permanent sharp growth is simply impossible to achieve. The only thing that will fix the problem is a completely new economic philosophy not based on permanent growth.