Got that? Today on NPR I heard the end of a segment in which Sally Singer, an editor at Vogue was discussing Fashion Week. She was talking about fashion and style and the new designs that are making their way to the runways. And she was making her case for going shopping. Not for buying like we all did just a year or two ago—well, maybe not all of us (certainly not me)—but for reasonable shopping, for updating our wardrobes, for continuing to care about being stylish and fashionable and being conscious about our appearance.
She reminded listeners that there are hundreds of thousands of people who depend on the fashion industry for their jobs. And if people don’t buy clothes (and make up and accessories) then those hundreds of thousands of people will be another group of people out of work.
In other words, not spending money, continuing to hunker down and stay at home and save what few pennies we have, is not a moral act.
I think she has something there.
Sure this financial crisis we are in has its basis in reality: the housing market was overvalued, people bought more home than they could afford: there was greed and usury and just plain theft. Sure, the past administration encouraged spending out of control. And yes, the American people, you, me, most all of us, we bought into it. Even those who were normally cautious allowed ourselves to dream a little bigger than we probably should have. And even those of us who saw some sort of disaster looming most likely didn’t expect it to be quite so pervasive. Perhaps we even hoped that Obama could head it off at the pass.
But the thing is that I believe that some large part of what is happening in our nation is that fear is eating on itself. I’m not saying we don’t have an economic meltdown, but I am saying that that meltdown is being exacerbated by the fear of the meltdown.
I, for one, think the banks could be doing a whole lot more than they are to alleviate the mortgage crisis --without so much government intervention. They're being lazy and selfish.
I also don’t think companies need to lay off so many workers at the outset.
And the stock market tanks on the mere whisper of the whisper of a possibility that things just might not go the way they think they should.
This then causes businesses to tighten their belts even further. And to be even more nervous and lay off more people.
Fear begets fear begets...
I’m not an economist. But, frankly, those guys don’t seem to be doing a very good job at this “fix” thing right now, either.
I do think if we think about who is losing jobs by our not buying at all we will see what makes sense and what doesn’t. Each time we don’t go to the store, someone stands a chance of losing his or her job because we think we are being morally superior by not shopping and “saving” money. But who loses and who wins in the long run?
TIP:
Enter the amount, and click "Tip" to submit!
Beth A.
Writer to the Stars
Douglas Moran
Sparking
Susan Mihalic
Steve Klingaman
Salon.com
Comments
Did you see the little girl on the news yesterday ( I think she was from South Carolina?) ? She wrote a letter to congress about getting some money for her school (JV Martin - I don't know why I remember that) and somehow it ended up on the President's desk. Her teacher or principal was with her and said that the problems the school was faacing were all "credit" related ... banks!!! Haven't they pumped billions in there?
Are the banks acting like so many of the rest of us ... they get a little cash and instead of using it (and helping to solve the problem) they are trying to pay off debt and tuck it away in case things get worse???
I don' t understand a lot of this stuff ... most of it, in fact ... but I do love good shoes and I'll keep buying 'em ... (((until my husband finds out!!!)))
Georgeous, Huh???
I don't NEED any more.
The entire human economy is currently based around the production and consumption of things we don't actually need. Really. Does the world need yet MORE Legos, Hot Wheels, or cute little candleholders from Ikea?
It's completely unsustainable.
I'm not even sure what would be sustainable.
Does this mean I'm not putting things in my online shopping cart from time to time? Nah. But I'm definitely aware, as I do so, that I want to spend because I have. Not because I need.
I'm going to disagree with your post and here's why: The above statement ( the last line of your post) is the key, in my view. The whole stimulus pckg is about trying to return us to where we were a few years ago. My position is that (and I've made this point is a couple of my posts) where we were is not sustainable. In the long run we need to behave differently.
We need to stop spending friviously. End the age of consumerism. Stop polluting and wasting resources.
Everytime I buy a sweater for $200.00 at some fancy store that I could have paid $30.00 for at a discount store, I drive the price up for everybody. .....
Sorry, I'm starting to rant. But suffice it to say that there is a diffrent way to go that back to the unstainable place that we just came from.
rated for engaging us in debate
Because frankly, it would also help people and be patriotic to restructure government and the economy in such a way that we had a social welfare net and government programs and healthcare for people who need them. But no one pushes THIS idea, and I know why -- because it DOESN'T BENEFIT COMPANIES. It doesn't benefit Vogue to suggest helping "the little people down the chain" that way. And that's all trying to incite people to buy crap they don't need will do -- help Vogue, and other corporations. And, sure, MAYBE keep an underpaid foreign worker in their $1 per 12-hour day hellhole factory. I don't think that helps them, and I don't think it helps America to try to convince everyone to continue buying things they don't need with money they don't have.
Sorry about the somewhat rambling nature of this -- velocity overtook structure today.
Until people start getting back to work and the massive layoffs stop, everyone else is wondering if they are next victim of the lousy economy.
It's contagious human behavior. Until credit starts to flow, and there is some level of confidence, which is difficult to define, people are going to hunker down.
I have a colleague who refinanced his house and called that the one big purchase he's making in 2009. He wanted to replace his car, and isn't going to do that. he's making pretty god money and he's skittish about this.
I wish I knew what the answer is. I don't. Now that I've heard about all of your wardrobes, I will give my wife a huge break on her wardrobe. So thanks for sharing that info.
I think she's more talking to these people:
http://www.adbusters.org/campaigns/bnd
http://en.wikipedia.org/wiki/Buy_Nothing_Day
Certainly it's complicated. I work in the retail sector right now, but I think Singer's argument holds about as much water as Bush's did when he told us to get over 9/11 by shopping. The stock market and mortgage crisis will not be fixed by individuals maxing out their credit cards. I would say don't spend more- but realize where your dollars go. Do you want them to go to the Targets and Wal-Marts of the world or the small businesses that survive day to day on your good will? This comes from a person who day to day struggles with the ethics of my buying choices. (meaning I'm nowhere near perfect) But some people don't even realize they have choices or that they are part of why small businesses die. I think we need to be more conscious consumers, not bigger consumers. We're already some of the biggest consumers on the planet.
I am on a cash economy .
No cash . No economy . In tight times old clothes work just fine .
But we're just the general public, trying to get by. We don't have golden parachutes or take obscene bonuses and government hand-outs with no oversight while allowing our employees go without health care while we plunder their pensions.
Until those issues are addressed and reversed, our shopping habits are but a drop in the badly leaking bucket that's become our 'economy.'
If people stopped getting things they want instead of need, then the world's economy would collapse.
The only thing I'd suggest is that instead of putting it on the credit card and making folks like Ken Lewis and Jamie Dimon rich, save up and then go and buy what you want. Of course, then you might decide, you know what, I really don't want it that much.
But then your savings would be bigger so you'd benefit and you could go and get something you really want.
However,-- and I don't think that my piece was hard to understand---- there are two points being made there: 1. It does not make you morally superior if you do not buy anything, ie., you aren't helping our economy get back on its feet at all that way because more and more people who depend on the economy recovering at least somewhat will not have your support OR a job tomorrow and 2. my thesis is that what is happening is not JUST a result of economics but of those economics being fed by our fears and our fears being fed by the fears of others which in turn.... well, you get it.
And, I might add, I do not think that what is happening now is at all like 9-11. The attack my terrorrists and Bush imploring us to go shopping is quite different from our pulling our own selves up by our bootstraps and trying to help a NEW president solves the fuck ups of an old one.
I do believe that fear begets fear, but I also know that too many people live far beyond their means. Too many seem to think that they are entitled to the lush lives of movie stars. Even at my worst, I never bought more than I could afford to pay off at the end of the month.
I have decided on my priorities apart from necessities: small meals/coffee out with friends, yoga, and personal development whatever form that might take. After all, I have more than enough stuff to see me through for quite some time.
Still worth a look and a listen.
Hot topic. I think your right and everyone else in the comment section is also right. I love to buy things. But I also put myself on a cash only basis for doing that years ago. Right now I can almost poke a finger through the bottom of my shoe. I'll be buying a pair before you know it.
The banks are making things worse rather than better. They are lowering credit limits and raising rates. Not conducive to stimulate consumer spending or confidence.
It's easy to have fear and not easy to have confidence if you are out of work and/or worried about the job you do have.
GM is trying to stay afloat by laying off 47,000 workers to get a bail out loan. No confidence builder either.
I have a thought. If 10% of the people control 90% of the money, what is their role in all this? It seems they should carry some responsibility for helping to dig us out of this mess. After all they are a large part of the reason we are here.
I'm like you and Irritated Mother. I'm no economist and can't say I understand all of this, but I do believe we need to get on a common course and have those at the top carry there part of the load.
That is my story and I'm sticking to it:)
I think cutting back has become a necessity for many and not simply a choice. Prices are getting higher, not lower. So, if prices increase and credit card rates increase, where are those people supposed to find money to pay for necessities, let alone little "treats"?
I agree with John Walker about the consumerism mentality of America and can attest to the fact that I am guilty as charged. But I have no more room for anything in any of my closets - they are filled up. I buy things that are made to last, classic and of excellent quality. I could dress for close to two years straight without wearing the same thing twice. I don't NEED anything right now and am mindful that many of my friends can't afford to go out for dinner. Times have changed. And I think it's going to get worse before it gets better. Now that I see things so deeply discounted, I keep thinking I can still get a better deal next week. But what's the point. I still don't need the stuff. I'd rather patronize a local restaurant and keep local people employed than Saks.
So, I'm not going hog wild--that's not me. I'm looking around to see what maintenance, upgrades to the house could be done. We want to help out by contributing to the food bank, local environmental actions, etc. I view it as the patriotic thing to do. Everyone has to do what they need to survive and what they think they should do--not what others tell them to do.
I do not want for clothes, i have so many now I will never buy any more for a long time. But I do think that our service economy workers are going down the tubes next. I do agree with John Walker that spending for spending's sake is over as for as I am concerned. I want all of us to live a sustainable life style, every single one of us. I do not think buying more stuff for the sake of supporting the workers in China is necessary or needed. I am heartidly sick of seeing folks in Zambia wearing cast-offs from the US of A with logos from big corporations. We all need to spend less on stuff nobody really needs.
Sorry for this rant. Ihave just been watching the news from Africa.
Of course banks are raising interest rates. Guess what happens to everyone they're lending money to in a recession? They become higher risks. Why? Because there's a higher risk they'll lose their jobs, and thus be unable to pay their bills. Last week, initial claims for unemployment were 627K. That is 627K more people who became a huge credit risk. That means that like any other business, banks will charge their customers who pay more to cover their costs.
Higher credit risks pay higher interest rates. This is why GE pays around seven percent on its bonds, and why MGM Mirage pays 47 percent.
Besides, you could, ohmigawd, not put anything on the credit card that you can't pay off by the end of the month. Then they could jack the interest rate up to a bazillion percent and it wouldn't matter.
I'm also getting tired of the "we put money into them why aren't they making loans" mantra. First of all, it's complete BS that banks aren't making loans. They are. I think that B of A wrote loans in the fourth quarter alone of approximately double the TARP injection the received.
Furthermore, it is loans to high risk individuals which got us into this mess. As a homeowner myself, I'm all for people owning their own houses. But it should be a house they can afford. If they can't afford to pay the principal and interest on a McMansion, then they should either save up money until they can, or buy a smaller house.
Unlike the right wing nutjobs, I don't blame the folks in low income neighborhoods for buying their houses. They aren't the cause of the problem.
No, the cause of the problem was the middle class and upper middle class jokers who could only afford a $300K place but who wanted a $600K place. So, they took the liar loan out, and only paid PART of the interest that was due that month.
We've got nobody to blame but ourselves for this mess.
As for the low percentages of people defaulting on their loans causing all the problems, the issue is leverage. Banks levered up as much as 25-30 to one. That means a four percent loss wipes out all of their equity.
Blaming the banks instead of looking in the mirror is ducking the truth. We need to look at ourselves, because we are the root of the problem. The banks sold us the rope, but we're the ones who hung ourselves with it.
Thanks for the financial info but why the statement- "the financial ignorance here is appalling." Although, I do not believe we can "spend" our way out of this crisis if it only generates more debts, Ms. Warren is correct that home value will need to come down - there is no way you can argue against that! Further, the banks are to be blamed because they created CDO and other negotiable instruments since the Greenspan era that had led the entire world into this global financial crisis. It is so pathetic that you cannot even value what's in most of the CDOs. You are in the investment business; the financial rewards were great for those who were willing to take the most irresponsible risks. I don't need to tell you the causes if you have been around since 1990s. There is no need to be condescending. The next Sarbanes Oxley is around the corner for you.
I like OS because there are some very intelligent thinkers who you will never met in your usual circle of friends; I value that. Also, do NOT assume people don't have money to spend. Today, the Market hits a 6-yr low, but some people can still afford shopping at Neiman you know.
is very interesting and provocative!
I heard someone on the news saying that people saving their money is good ... but everyone saving their money AT ONCE turns into a catastrophe. FYI: I'm doing my part, having just dropped something like 1000 dollars on an emergency brake job for my car. Still... the sales shark wanted me to trade the old boy in for a newer model and I was just too nervous to do that. So put me somewhere in the middle (Will spend if cornered).
Doesn't the fashion industry depend on foreign workers? If we want to help Americans, we can buy at resale shops. One of the chicest, most worldly women I know always looks fabulous by buying from the Salvation Army in a town where the super-rich toss away chic clothes. Another friend who, in the interests of full disclosure, I admit is French, always looked strikingly beautiful even when her funds were frugal and her closet small. In fact, she looked better not spending money than those of us who did bought new clothes.
Today, although no one should buy luxuries unless they are sure the necessities are taken care of for at least five years, we still have the super-rich who, if they can dredge up a social a conscious, could spend us into a better future than the one economists now predict. Economists who think the banks should be taken over by the government also agree with you that fear is keeping people who can reasonably spend money from spending it. But that's not a lot of people. That's members of the owning class. They stole our money under Bush, and now it's time to give it back.
And BTW everyone who works in the schmata industry is NOT a foreign worker. There are a lot of young American designers, not to mention shopkeepers and workers who need jobs. So think about that!!!!
Today, I received, in the mail, the information that my Capital One Card, which I have had for over 20 years, never been late on, and owe nothing on, will have its interest raised to 17%. It feels "personal", but I know it is an attempt to balance out the people who aren't as anal about paying off the balances, or those who, sadly, really depend on the cards. Banks don't WANT to lend to me, because I never pay interest anyway!
I am torn about the whole "banks are to blame" business. I and my sister bought houses at nearly the same time. Though she and her husband are nearly empty nesters, with only one child (18) at home...they UPSIZED to a million dollar McMansion with 5 bedrooms wine cellar and home theater room, and a 4 car garage. I don't know how many thousand square feet, but it is huge! My husband and I bought a 2 bedroom townhome, and then refinanced into a lower fixed rate.
They are losing their home, and the only reason we aren't is that we bought within our means. Just because "it's" out there, we don't need to buy, whether that is financial products like Mazar's investments or interest-only mortgages...or just too much of anything. Sadly even when we try to be "smart", our retirement funds disappear. I dunno what the answer is...maybe:
Buy, buy local, support small business....but don't go into hock for things we don't need.
(And I don't have any problem with my tax dollars going to help homeowners in need, even my sister and her ilk, because it is a hell of a lot better than spending it looking for "weapons of mass destruction" and "mission accomplished" banners!!)
As for your sister. I have never understood that. Who needs that much space? I see it all the time in empty nesters. I DO NOT WANT that much space. As soon as my son went to college I downsized immediately and moved my daughter and me to a much smaller house. Then I married and I admit the house is a little small for 3 but she will be off in two years and then it will be fine. I got lucky and sold before everthing went to hell. But that kind of huge house for 2? Who wants to clean it? Or rattle around in that kind of space? McMansions confound me. And most of them aren't built worth a damn. Who thought up that trend?
Thanks for commenting, though. And I think you are most kind in your generosity towards others. I do.
As for the Cap 1...yep, it's got to go, I think. And the McMansion is hideous. No personal touches, just "canned decor" and so big it echoes!!
Obama taking the trip to Canada for the day, stopping in at the bakery to buy maple leaf cookies. He pulls out his wallet to PAY for them (think about that for a minute), the baker says "Are these for your daughters?" He says yes and then the baker says---the cookies are on me.
The narrative of goods and services being bought and sold for value.
That's huge.
They are dreaming dreams of cabbages and kings :)
But even if federally chartered banks -- which investment banks are not -- did create CDOs and liar loans, so what? Even if they, not the folks like Countrywide, created loans where people didn't even pay all the interest that was due each month, so what?
Who put a gun to individual's heads and forced them to take out those loans?
The argument that I keep on hearing about how the mean old banks are to blame sounds eerily similar to the arguments we heard about the mean old tobacco companies making products that kill people. In both cases, the products these companies make are bad for you. One will kill you financially, one will kill you physically.
But nobody forced anyone to use those products. You know, even at the height of the subprime craze, there were these things called 30 year fixed mortgages. Maybe people should have used that product instead of taking out a loan where the principal amount went up month after month.
I don't blame the people who make the products. I blame the people who used products which were bad for them because they didn't bother to do their homework.
Or what's possibly even worse, those who did their homework but didn't care, because they were so determined to buy that $600K house that they couldn't afford they did it anyway.
Blame the people who used those products. Blaming the banks is like blaming a car company when someone drives drunk and kills someone in a car they made.
The product was offered which would destroy our finances. We had the opportunity to flip the bird to anyone who offered it to us and tell them, no way, I want a different product.
Many of us chose to do that. Others did not. And those people have only themselves to blame.
If you don't like the interest rate a credit card company wants to charge you, then simply do not run a balance and guess what your interest rate is?
Zero percent.
Okay, I think I have a handle on this now. I originally interpreted Sally Singer as meaning, "The decision not to go shopping has no moral implications." Okay, I can agree with that. You shop or you don't. Where's the moral dilemma? But now I think what's meant is disagreement with the notion, "It's a good thing, deciding not to go shopping." Does that sound right? Words, they're so confusing...
I don't have any views about the morality or immorality of shopping or not shopping. But I will chip in one idea that's probably pretty obvious but may not be easily recognized in this context: What's good for the economy, in the overall big picture, is not necessarily what's good for a specific individual acting in the economy. For a simple example, consider that it's good when a bad business fails; it's something that other businesses will observe and learn from and avoid. On the other hand, it's pretty terrible, usually, for anyone working for or owning that failed business. My understanding (though I'm definitely implicated in Tony's description, "appalling financial ignorance") is that, as a few other commenters here have said, there are some things that would probably be good for the economy, overall, even if these things were bad for individuals. A lot of individuals. That makes it tough.