Our Great Feast: First Credit, Now the Internet

by: Sydney Williams

Think of how we live today. Compare this with a year ago, two years ago or five years go. Then, we feasted on credit. Now, we're searching every way possible to shed those extra pounds.

In those heydays, we spent money we had โ€“ and money we didn't have. It was as if we could snap our fingers, and โ€“ presto! โ€“ anything we wanted would suddenly appear: a large house, an expensive car or a steady diet of fine wine and organic prime rib.

The magic food was leverage. Since 2000, consumers increased indebtedness by $4,400 per person (.pdf), where now 14 cents of evert income dollar goes toward debt repayment. The magic spoon was plastic. Nearly eight in 10 American households have one or more credit cards, 5.4 on average. Six in 10 carry a balance.

Yet, despite massive belt tightening, the addictive impulse is alive and well .

Instead of dollars, consumers are spending that other precious resource: time. As some folks argue for a return to a simpler, less material lifestyle, consumers are still showcasing full plates of self-promotion โ€“ just not in terms of big screen TVs or luxury watches.

The eatery, this go around, is the Internet, and the menu, a selection of social networking sites from Facebook to Twitter. Facebook, for example, has a unique global audience of over 108 million people. The profligate 35-49 year old demographic, once debt bingers, accounts for most of its growth. And 45 to 54 year olds are 36% more likely to use Twitter than any other age group.

Since 2006, time spent on social networking sites has increased 93%.

So, does this constitute the makings of the next great crisis? Have Wall Street PhDs figured out a way to securitize all those hours spent tweeting? Are MySpace and Linkedin tomorrow's Citigroup (NYSE:C) and Bank of America (NYSE:BAC)?

Okay, maybe not. The point is this: consumers are never idle. Their constant motion constitutes a potent economic dynamic, which, at times, can overindulge itself.

Clearly, social networking sites encourage this dynamic. However, because they're so new, no one really knows where they're heading, and whether this direction might somehow end in a bad case of indigestion.

Disclosure: no positions