Monday, October 6, 2008

There's pain - but will there be gain?

From today's Times, a report on consumer spending going down as Americans look at their declining 401K statements and, one might add, express their lack of faith that the bailout is going to solve anything. You could see a similar report in any newspaper in the country this week.

For some Americans, the pain is already acute: jobs disappeared at a faster clip in September. For many others, day-to-day finances are fine for now, but the financial outlook is uncertain: 401(k) accounts are dwindling, loans are hard to get and house prices continue to fall.
What this understates is that lot of people have been doing their spending on credit, whether it be home equity loans that have been pulled back or credit cards that might have skyrocketed in fees and interest rates.

I'm somewhat of two minds about this. The economy is driven by consumer spending and a lot of people will get hurt if that goes down for any length of time. This is a common criticism of simplicity - that if everybody did it we'd be in the deep doo-doo. But we're in the deep doo-doo already, the getting-and-spending economy is proving unsustainable, and (oh by the way) materialism and living-to-buy is spiritually ennervating.

We must re-order our economy so that it is more focused on developing green technologies and less on private consumer spending. I only hope that this economy helps get us (force us) to that point. As I've said before, if we only go back to our old gettin'-and-spendin' ways as soon as conditions ease, the opportunity will have been wasted. If the current economy helps us make the changes we need to move to a new mode of living, that's the only possible way it could be considered worth it.

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