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  • From: "Wendy" <crazygardens AT verizon.net>
  • To: <bobford79 AT yahoo.com>, <homestead AT lists.ibiblio.org>
  • Subject: Re: [Homestead] Throwing the Gun
  • Date: Sat, 4 Oct 2008 10:35:04 -0400



Okay, what is cold hard cash? You say that real hard cash is still real hard cash, and that the average Joe still uses real hard cash (as opposed to credit or cash flow?).

I go to work. They pay me. I deposit it in my checking account and put part in a savings account. My checking and savings accounts are insured through FDIC for $100,000 ($250,000 now). That is cold hard cash.


The following are some basic statistics from the Fed and from cardweb and another site or so , and some I wouldn't know know how to look for the actual statistics.

1)The average American owes over $9000.00 in credit card debt. That figure is misleading because some people (myself included) use CC alot, but never pays interest, pays it off at the end of every month. Still, about half of the people who do carry debt, carry a 'median' debt of about $2200.00. Between 75% & 80& of all Americans (not just citizens) use credit cards.

Sad, isn't it? People like you who merely use their CC as a means of convenient payment then pay them off at the end of the month, are not living on cash flow. You could just as easily pay cash, write a check or use a debit card for your transactions. People who use their CC for everything then only make the minimum payments because that is all they can scrape together or would prefer to spend their cash on some other thing they don't need, are living on cash flow. People who have accrued $9,000 in CC debt are most likely living beyond their means in some way. There are the cases where an illness or other expensive necessity has put them in debt, but these people are not the norm.


All of the above would apply to the average Joe.


2)I can not find a source for this, If you can, please help. I would think that most Americans either carry a mortgage Or pay rent, one of the two. My mortgage is paid off, but most people, I would think (but can't cite stats) either carry a mortgage Or pay rent. Rent or mortgage implies use of credit.


Mortgage is using credit. However, if you have purchases a home that is within your means, it is not excessive credit. Where the lending institutions have come into trouble is lending for homes that are overvalued. Homes have been overvalued for quite a while. The real estate bubble came about because the baby boomers needed housing. They bought their first homes, bought bigger homes has their families increased in size, then downsized and bought their final retirement homes. As the BB's moved into the next stage of housing, a glut of homes were left in the last market. For some reason, new home construction starts was picked up on as an economic indicator when it really did not have as much to do with an improving economy as was implied. To move these homes left in the BB wake, banks had to start lending to people who were not economically qualified to buy and to bail out over-zealous developers who were also encouraged (how many communities encouraged development growth and thought it was a good thing lol) and are now stuck. Our government encouraged this to prop up the new construction stat.

Rent is not credit. I always had to pay my rent a month in advance plus I had to pay an extra month when I first moved in. No credit here unless your landlord has a mortgage on the property and is using your rent to cover his mortgage. Then the debt is his not yours.

the above would apply to the average Joe.


3) Over 82% of americans carry a cellphone (I do not). Cell phone usage generally implies a monthly plan (my wife carries a pre-paid cell phone for emergencies)which implies credit.

A cell phone (or any phone) uses month to month credit on a small scale. This is similar to using CC for convince and paying them off every month. Once again, not what I'm talking about.


the above would apply to the average Joe.


4) I couldn't find a stat for what percentage of Americans presently have an auto loan . I'll guess it is probably at least 50 % since the average length of car note is now five years. (my autos were bought with cash). I did find this "The typical buyer in 1975 borrowed about $17,000, adjusted for inflation, to buy a new car. By 2006, that figure had climbed 63 percent, to more than $27,000. ". Remeber that both figures are in today's dollars, having been adjusted for inflation. This takes significant credit.

the above would apply to the average Joe.

Wow, I didn't realize how badly inflation had affected things. In 1974 we bought a new Subaru station wagon. We paid $4,200. If that would translate into about $17,000, I'm impressed.

Part of the reason cars cost so much today is all the features and advanced technology that are in them. My Subaru did not have computer controlled ignition, anti-lock breaks, anti-theft alarm, GPS, keyless ignition, remote controlled doors, or any of the many, many other features and gadgets that are on vehicles today. My 69 Nova had even less. Comparing pricing of cars today with then is like comparing apples and oranges. If you could compare cars with comparable features I don't think you would see quite the disparity.



5)Most people have homeowners or renters insurance (I pay mine a year in advance, the longest they will allow), most people have auto insurance ( i pay mine six months in advance, the longest they will allow). Both of these, especially when paid as monthly payments, do imply credit. And, I'm not even going to try on health or life insurance --far too complicated.

the above would apply to the average Joe.

The insurance game is an example of a large scale racket. Most of us are either way over-insured, multiply insured, or uninsured. This sector of our economy is another example of greed run amok with the executives skimming off the top and the policy holders getting rooked at every turn. I don't even want to go here now.



Now, I could throw in other misc., such as monthly utilities, etc., but my point is that I don't see how "average Joe" is less dependent on credit. I don't see how "cold , hard cash" is something for which Average Joe uses to his benefit , realtive to the upper tier of society.

Once again the typical monthly use-it-and-pay bills are not what I am talking here.


And, even if average Joe does use cash, every paycheck, to pay his bills on time, and buys nothing unnecessarily; how does that help him when inflation comes into the picture? If his job or pension continues to pay him $X,XXX every paycheck, but the price of most things increase, not because the product is scarcer, but because the dollar is worth less; how does Joe benefit.?


What you are missing here, is that most of the inflation we are seeing is because of the speculators on Wall Street. Not even our inflation is real anymore. Speculators stop speculating, things will improve.


what happens when the plant, factory, gov't , etc. for which average joe works starts laying off people. It is not the high flyers, who worry in this situation, it is average Joe.



There are sectors of our society that will be affected. One example that Bush mentioned was the common folk who work at the restaurants that serve the Wall Street crowd will lose business if Wall Street collapses. Yes, the vast infrastructure that serves Wall Street will be in for a shake up.

A big part of our economy has suffered greatly because of the loose credit flow. This is where large corporations got their money in order to abandon the existing US manufacturing sector and build overseas. This is the cash flow that pulls products in from China in order to create the trade imbalance. I'm not saying that there isn't going to be a bit of a shake up on Mainstreet, we would see a shortage of products made in China and therefore also US products which rely on foreign parts, but it will not be nearly as disastrous as some are making it out to be. If Common Joe has a little patience to ride this out a bit and holds his head while the wealthy are in a panic, the fall of illusionary canopy of our economy (more like a vacuum nozzle) will be a very, very good thing.

Wendy

I'm not arguing. I posted how some applies to me, to show that , as an individual, it would benefit me , if you are correct. Please would someone show me where I am wrong.

I simply do not see how average Joe benefits. Instead, I see the same people who were reckless before, being able to slide through, with some discomfort. And, I see Average Joe being crushed. .............bobford









http://moneycentral.msn.com/content/Banking/creditcardsmarts/P150744.asp

http://www.gearlog.com/2007/11/us_cellphone_penetration_tops.php

http://blog.cleveland.com/business/2008/03/americans_today_take_nearly_tw.html


--- On Sat, 10/4/08, Wendy <crazygardens AT verizon.net> wrote:

From: Wendy <crazygardens AT verizon.net>
Subject: Re: [Homestead] Throwing the Gun
To: homestead AT lists.ibiblio.org
Date: Saturday, October 4, 2008, 2:41 AM
You know, I must be going senile, but I totally agree again
with James. His
"throwing the gun" analogy is a very accurate
one. Also interesting to note
is that when the markets began to shake, the price of oil
began to drop.
Gas at our local station fell 20 cents over night. I still
stand that this
crumbling of the top level of our economic structure is
actually a good
thing. It has been top heavy for a long time. It will
point out how many
people depend on the illusion that cash flow creates wealth
or that the
imaginary money contained in stock value is somehow real.
Your real hard
cash is still real hard cash. It is also interesting to
note that President
Bush (or anyone else in Washington) could not seem to come
up with a real
answer when pressed on how the crumbling of the big
financial companies
would affect Common Joe on the streets. That is because
Joe still uses
cash. These next few months should be interesting.

Wendy


> You know the scene in the swashbuckle, adventure, or
war movie. The
> protagonist is defending against overwhelming odds,
certain doom, he draws
> his pistol
> and begnins shooting. Bang, bang, bang, ..,. click,
click .... then in an
> impulse of desperation, he throws the gun at the
rapidly advancing enemy.
>
> That's what's just happened. As many,
moi-self included, have opined,
> those
> thrice weekly announcements that the Fed was injecting
$60B then $100B
> dollars
> was the first few rounds, then they forgot to count
the shots as the last
> bullets in their gun were discharged at AIG, Fannie,
and Freddie.
>
> The bailout passed and signed today it the frantic,
last ditch,
> ineffective,
> and panicked throwing the gun at the enemy.
>
> -----------------------------
>
> Now, financial reporting is a curious thing. The rise
and fall of stock
> values seems to have no basis in reality and the most
idiotic news sends
> the
> numbers widely up and down. Even with no dog in the
fight, it's amusing
> to read
> them in times like these. And they've gotten to
the point that they go
> something like this: "Stocks soar today as CEO
finds 37 cents in the
> pocket of his
> spare pants." "Stocks plunge today when
company vice president learns the
> Wendy's coupons he was going to use for lunch have
expired!"
>
> The most amusing have been the analyses that appear in
groups of four like
> this:
>
> Stocks higher on the fact that A didn't happen.
> Stocks lower on the fact that A didn't happen.
> Stocks higher on the fact that A did happen.
> Stocks lower on the fact that A did happen.
>
> Yeah.
>
> Recently it has been this heinous bailout bill. Over
the past week these
> comments acutally appeared on some of the financial
news sideboards:
>
> Stocks higher today on prediction that bailout will be
defeated.
> Stocks lower today on prediction that bailout will be
defeated.
> Stocks higher today on prediction that bailout will be
passed.
> Stocks lower today on prediction that bailout will be
passed.
>
> Todays tag was a jewel. "Stocks sharply lower on
economic news inspite of
> bailout."
>
> Yeah.
>
> Fact is the economic news all broke early this morning
and DOW was up more
> than 300 points in the afternoon. Then the very
moment the bailout was
> signed
> into law, it began to drop losing 486 points by
closing.
>
> The big IF has been, what if the bailout doesn't
"work"? Of course it
> can't
> "work", it is a PR job to try to keep the
crumbling economy intact until
> after
> the election. And it isn't working. We
(collectively) have now shot all
> our
> rounds and today we threw the gun at the enemy.
>
> If McCain had any savvy, which apparently he decidedly
does NOT, he would
> have stuck with his previous guns of 'no
bailouts' and squarely opposed
> this
> bill. Then when the economy sank, he could say
"See, I told you, I told
> you I am
> the maverick, I'm the only one who stood firm
agaisnt this and now
> seeeeeee....."
>
> But he didn't. Flippin' idiot!
>
> Now we ride out a depression or else the government
does what it did in
> Germany in the '30's, what Argentina did, what
Brazil did, and what
> recently
> Zimbabwe did ... we keep bailing out this and that
until the currency
> hyper inflates
> and, like Zimbabwe, we start issuing $100B dollar
bills and it takes fifty
> of
> them to buy a loaf of bread.
>
> </HTML>
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