The American Economy Has Entered Into “Running In Place” Mode?

I went to visit my sister this last weekend (March 8-9), and one of the subjects was Ebay. At first she talked about how they no longer accepted negative feedback (under the mistaken belief that the customer is always right so ignore any criticism of them). But when I asked if people were still buying, she said:

People haven’t been buying stuff. I’ve been watching Ebay for a while, and nothing’s selling.

That sentiment was echoed when I visited a friend nearby. He said about the only stuff that was selling was the collectible stuff. Which he has had enough of to hang on with recently, although he’s also noted that much of his sales were from overseas.

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I’d like to believe that this is because people are beginning to spend more wisely, or that they had gotten to the point that people are now using their credit cards for necessities. In short, they’re not being frugal BECAUSE THEY NO LONGER CAN.

That’s right, friends: Food and fuel prices are rising so fast that they’re shoving aside computers, furniture and vacations as sources of deficit spending. To further wrench your gut, there’s also the possibility that they’ve grown so used to deficit spending that they see no difference between going in debt for the vacation and going in debt for the tank of gas for the SUV they’re now unable to sell and feel they’re stuck with for worse or for much worse.

Here’s how deeply our debt culture has developed: We now have a company advertising on Chicago Radio who’ll refinance your automobile. That’s right: You can buy a newer car and set up payments so that you’ll end up paying less per month than before. The catch? You’ll owe money on it long after it has ceased to be useful.

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You know what this reminds me of? It reminds me of a problem many transit companies ran into: At a certain point you end up deferring new purchases and plant maintenance because it costs money that you need to keep what you have running. What happens is that you get to the point where even major repairs become too much to do, so you end up duct-taping everything together and shortening runs to nurse every mile out of the stuff you can. Eventually runs get cut out not because they’re underused OR because they’re unprofitable (although they may be both these things), but because you need the machinery to run what’s left of your system.

In other words, you run in place. And unless you can get a sizable infusion from outside sources willing to invest in your product, the product will eventually shut down unlamented.

And when that happens when this happens to countries? Stuff disappears. People settle for less, or move out in search of better stuff. People work like crazy just to survive, then eventually things fall apart.

And right now, people are using their debt to cover the month-to-month. Running in Place.


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