Karen Consumer

Anticipating the Next Boom Without Going Bust

The banks have cheap money. The consumers do not. Car totaled 2/25/09, had to buy used car, paying 17% interest (and damn happy to have been approved for the loan). Credit cards bumped from 19% to 29%. Can't refinance house, no one will touch me. But I'm one of the few with job security (at least until the city's budget year ends Sept 30).

Two kinds of young people entering market today, people who graduate college with loans and credit card debt and no job to pay for it, or people graduating high school having to pay cash for college because loans prohibitively unattainable. What are they going to learn from this? Don't get credit, don't even try, stay at home with parents and hoard cash until you can pay complete purchase price in cash with no financing. Don't put money in stocks, they treat your money like their personal gambling fund, only they never lose (love them fees and retainment bonuses). Your better off going straight to Vegas (or Atlantic City, Bosier City, any Indian casino in America).

How do I know that? I'm raising that kid. And so are my friends.

Oh, and I loved the part about the government instructing banks not to broadcast how they faired in the stress tests (after of course guaranteeing that no bank would fail in the first place). Oh yes, that's the way to build confidence.

Data Not Supportive of Higher Stock Prices

When Walmart sees smaller than expected same store sales, you know money is tight. Even I (a regular Walmart shopper) was surprised at that, as I see more people than ever shopping there, and Walmart is known to haggle down suppliers to the bone.

People without jobs are borrowing or living with family and friends who do have jobs. At work there's an entire (almost cult like following) group of dedicated couponers.

How the stock market makes money when no one is buying has always been a mystery to me. I always understood business saved money when they layed off people, but when you couple layoffs with no sales, I would think what's left is just covering the lights and the taxes, and how long can you stay in business like that?