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Guest Post: That Which Is Too Fearful To Speak: The Demise of the Consumer Economy

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Mon, 08/01/2011 - 11:05 | 1512635 Debtless
Debtless's picture

Quick let's bomb something!

Mon, 08/01/2011 - 11:08 | 1512649 anynonmous
anynonmous's picture

In the Apple store yesterday I saw evidence of the demise of the consumer economy. I only had to wait in line for 15 minutes to by an accessory for my iphone.

Mon, 08/01/2011 - 11:12 | 1512669 Conrad Murray
Conrad Murray's picture

Far worse is the evidence of the intellectual demise, the existence of Apple stores.

Mon, 08/01/2011 - 11:22 | 1512703 anynonmous
anynonmous's picture

they are quite a spectacle those stores, this one is in a mall (that was also  packed with demised consumers) it took 2 minutes just to push my way to the 'genius bar' and you're  correct the fact that you have all those morons who don't even know how to upgrade the OS so they have to go to the store for help

Mon, 08/01/2011 - 12:00 | 1512948 azzhatter
azzhatter's picture

and especially that a functioning human being would want to spend a sunday there

Tue, 08/02/2011 - 01:16 | 1515809 StychoKiller
StychoKiller's picture

I want me one of them painted-rock iPads (iRocks?)  :>D

Mon, 08/01/2011 - 11:31 | 1512749 Sudden Debt
Sudden Debt's picture

And you still bought it?

I only buy 30 minute waiting line stuff. Just because it's better quality. Why buy stuff that not everybody wants...

 

Mon, 08/01/2011 - 11:29 | 1512725 Sudden Debt
Sudden Debt's picture

 

 

YES WE CAN!

STARTING OPERATION NOBEL PRIZE 2!

BUT WHAT ARE WE LOOKING FOR THIS TIME?

Mon, 08/01/2011 - 12:07 | 1512982 Kayman
Kayman's picture

The tipping point is when Obama is awarded the Nobel Prize for Economics, summer 2012.

Mon, 08/01/2011 - 11:37 | 1512780 midtowng
midtowng's picture

Isn't BofA foreclosing on homes just to tear them down? Sounds like digging a hole to fill it back in to me.

Mon, 08/01/2011 - 11:54 | 1512900 snowball777
snowball777's picture

More like digging a hole then squatting over it for a sufficient amount of time to fill it.

Mon, 08/01/2011 - 14:06 | 1513522 narnia
narnia's picture

a testament to central planning efficiency: a perfectly livable home is bulldozed to make way for a state park to provide a lawn for a homeless person to sleep on because the tax benefit from deducting the land to the profitable loss covered bank was greater than the future value of its Section 8 revenue less property taxes, insurance & administration.  

Mon, 08/01/2011 - 13:00 | 1513242 toady
toady's picture

Lets bomb something?

How about consumers?

I was late to the game on this one. I wasn't aware of the 'consumers are 70% of the economy' number until W was saying 'everybody go shopping' after 9/11.

I guess I'm old school, but I only buy what I need, I try to save up for large purchases, and pay off my credit cards every month. To do otherwise is financial suicide.

Bomb the consumers!

Mon, 08/01/2011 - 15:48 | 1514127 dolly madison
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Yeah, I was mostly not good for the consumer economy either.  I did have a brief spendfest right after I got done with college, and had some good money for the first time.  But mostly I enjoy frugality.  Keeping up with the Jones' stresses me out. 

Mon, 08/01/2011 - 13:18 | 1513351 Haole
Haole's picture

Right you are, unfortunately it is ongoing figuratively and could likely take place literally within U.S. borders any day now...

Mon, 08/01/2011 - 11:06 | 1512638 km4
km4's picture

By DAVID LEONHARDT
Published: July 16, 2011

We're Spent http://t.co/xDq6UQb The old US consumer economy is gone, and it’s not coming back

THE notion that the United States needs to begin moving away from its consumer economy — toward more of an investment and production economy, with rising exports, expanding factories and more good-paying service jobs — has become so commonplace that it’s practically a cliché. It’s also true. And the consumer bust shows why. The old consumer economy is gone, and it’s not coming back.

We are living through a tremendous bust. It isn’t simply a housing bust. It’s a fizzling of the great consumer bubble that was decades in the making.

Mon, 08/01/2011 - 11:33 | 1512719 CrashisOptimistic
CrashisOptimistic's picture

Welcome to the post Peak world.

A consumer society can't exist at $118 Brent.  That's just the way it is, has been, and will be for the fairly short period of time remaining for "modern" society.

You'll know that it's time to leave town and find a farm labor job in Iowa the day that a Chinese frigate stops a Nigerian tanker enroute for Houston and makes use of no force, particularly, other than to detain the ship long enough to close the deal on offering them 20% more for their cargo than Houston is paying and diverting the ship to Shanghai.

When that ship diverts to Shanghai, get away from the cities.  No US president can permit a cutoff of US oil imports, even if it does not happen by force.

It won't be much longer for that, either.

Mon, 08/01/2011 - 15:01 | 1513868 Marco
Marco's picture

What comparitive advantage does the US have for production exactly?

Mon, 08/01/2011 - 19:08 | 1514751 thewhitelion
thewhitelion's picture

I think our big advantage is in producing coffee.  If not, I should have scheduled my economics class for later in the day.

Mon, 08/01/2011 - 11:06 | 1512642 Tense INDIAN
Tense INDIAN's picture

Consumer economy in Europe and America gone ....what will happen to the Indian IT now...

Mon, 08/01/2011 - 11:17 | 1512683 falak pema
falak pema's picture

you will change your pseudo and become 'relaxed indian'! 

Mon, 08/01/2011 - 11:06 | 1512643 no2foreclosures
no2foreclosures's picture

What is a cargo cult?

Mon, 08/01/2011 - 11:22 | 1512707 Bastiat
Bastiat's picture

Wikipedia is your friend!

 

Mon, 08/01/2011 - 13:30 | 1513424 Mr Kurtz
Mr Kurtz's picture

Surely you jest!

Mon, 08/01/2011 - 13:48 | 1513515 Mr Kurtz
Mr Kurtz's picture

Surely my friend, you jest!

Mon, 08/01/2011 - 11:08 | 1512644 Cognitive Dissonance
Cognitive Dissonance's picture

 

That is the transformation that terrifies the Status Quo, for it is a transformation for which there is no model of control and exploitation: the demise of the consumer economy and the rise of a productive economy with no need for Wall Street or rocks painted to look like magic radios.

But make no mistake about it, the scociopaths will try to control it. And if they can not control it they will destroy it.

BTW my latest article, which is about addiction in all its forms.

http://www.zerohedge.com/contributed/fiat-crack-addict-convulsing-and-headed-straight-dts

Mon, 08/01/2011 - 11:16 | 1512681 GeneMarchbanks
GeneMarchbanks's picture

Somehow overseas 'enemies' are a much easier way for the Status Quo to redirect the rage. It will be attempted no question and we'll see if it works. Keeping this domestic is half the battle, I mean, look at Greece. They are inbetween right now. They've diagnosed the problem in their system yet still are falling for the 'Get Goldman' nonsense. We know they won't bring down Goldman, but maybe they can get some citizen representatives who won't make room for banks to bribe them within their governement. So that's my little dream for today...

Mon, 08/01/2011 - 11:18 | 1512689 baby_BLYTHE
baby_BLYTHE's picture

great piece, CD.

Everyone I know (ages 19-29) has no net savings, most our in debt and the others live paycheck to paycheck (if they even have jobs).

The problem with our economy is there is no incentive whatsoever to save. QE to infinity, zero interest rates, decline wages, offshore manufacturing and run-away cost of living are being felt FULL FORCE right now.

I can't imagine it being any worse, but get worse it shall. I don't even know why I am in college, as I do consider it worthless for the most part. The only reason I decided to stay is because I am having fun, have a great group of friends, am working at a pretty decent job on campus, am able to save and have no debts (thanks to the multiple academic scholarships I got out of High School).

The economic system is totally broken. The understanding of credit/money/savings/capital/investment has been totally botched by the entirley flawed economic system we have been living under for the past several decades. Like many here said before, it must get a lot worse before it gets any better.

Mon, 08/01/2011 - 11:28 | 1512731 Cognitive Dissonance
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I agree. It will probably get much worse before it gets better. But bottom line we can choose our own bottom. We can say stop.

But as long as we choose to see ourselves as victims of 'the system', powerless to do anything but go with the flow, the bottom will be rock hard and very ugly.

Mon, 08/01/2011 - 11:34 | 1512759 Zero Debt
Zero Debt's picture

An indirect effect of people living paycheck to paycheck is that they become dependent on the system and hence will seek to defend it. Like a "Stockholm syndrome" but you don't even know you're a captive.

 

Mon, 08/01/2011 - 11:34 | 1512764 GeneMarchbanks
GeneMarchbanks's picture

'Everyone I know (ages 19-29) has no net savings, most our in debt and the others live paycheck to paycheck (if they even have jobs).'

I've observed this also. Yet who do you blame? Or a better question: who sets the morale amongst US youth? Hollywood? Family? Popculture? As always things get more complex the deeper you dig but there is certainly isn't an easy answer.

I'm reminded of that quote from The Coming Insurrection: 'the future has no future.' If you're 19-29, indeed.

Mon, 08/01/2011 - 11:54 | 1512897 Cognitive Dissonance
Cognitive Dissonance's picture

 

Yet who do you blame? Or a better question: who sets the morale amongst US youth?

Same question. It seems we have oursourced the rasing of our children to the boob tube and popular culture. Since we are no longer responsible for the product of our loins (because we oursourced it stupid) it can't be us.

So we are all victims. Help. I've fallen and I can't get up.

Mon, 08/01/2011 - 11:56 | 1512916 snowball777
snowball777's picture

Yet who do you blame?

Their ersatz parents. These are learned behaviors.

Mon, 08/01/2011 - 17:39 | 1514509 Cathartes Aura
Cathartes Aura's picture

why on earth are you looking for someone to blame?  the poster admitted he/she was content with the choices made, and why do people in that age group think there should be "net savings" while they're in school?  if they're in debt, they've made a choice to be "there" - that's an age group where choices are great learning tools, as they have consequences.

speaking from a personal space, when I was in my 20's I chose not to "get a paycheck" but to live creatively, with others of the same ideals - the experience "took" and the whole consumer-identity just didn't apply to me/us. . . granted, I wasn't in amrka for my 20's, so wasn't subjected to the constant conned-sumer propaganda - but moving back & witnessing firsthand how immature it is to go into debt for TOYS, or to conform one's appearance to dumbed down standards, I can honestly say I'm content with my life choices.

no one's to blame for any one's personal choices, self-responsibility is a mark of maturity.

Mon, 08/01/2011 - 13:09 | 1513312 Iam_Silverman
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"The problem with our economy is there is no incentive whatsoever to save."

Wrong.  What you are implying is that there is no monetary reward for savers.  Once you have lived in a situation where no savings exist and every small occurrence can be made into a larger tragedy, you now have incentive to save as an adult.  I would love to have more return for my savings - but because I am not getting over 1.5% doesn't mean that I will blow it all.  I still see the need for an emergency nest egg should something happen (here on the ranch lotsa stuff breaks - ever replace a clutch on an older tractor?).

Mon, 08/01/2011 - 15:32 | 1513370 baby_BLYTHE
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What I am implying is that the FED and Government are 'hammering on a string' trying to force people to spend their money as quickly as it is earned in effort to stimulate the economy. Thus, having an negative incentive upon consumers which alters economic behavior on the whole

Yes, you are correct there are no monetary rewards which was a large part of my point. Over a long enough period of time however, it has been going on for well over a decade, the economic behavior of individuals change leading to malinvestment and distortions in the economy. In the long-run this is very damaging to the economic system at whole, which is where we find outselves today. That is why we have high unemployment, declining real wages and record levels of consumer debt to which I argue cannot be reversed until the system is purged, debt and malinvestment is liquidated and the ENTIRE economy restructures.

Mon, 08/01/2011 - 16:22 | 1514269 Iam_Silverman
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"What I am implying is that the FED and Government are 'hammering on a string' trying to force people to spend their money as quickly as it is earned in effort to stimulate the economy."

Yes - they are stealthily pushing commodity inflation and wage deflation in order to accelerate "income reclamation", or otherwise known as money velocity.  I can understand how many younger folks today are living paycheck to paycheck with zero savings.  But, we still need to instill a sense of being prepared to handle emergencies on your own.  The government (as much as they like to) will not always be there to give us shiny new SNAP cards and never ending unemployment benefits.  I have been working on my own college age son to give him a sense of fiscal responsibility.  It's almost working, although he has ditched the iPhone for another phone as the cost of the data plans were more than his budget allowed (budget for him is: money in = money out with no deficit spending).

Mon, 08/01/2011 - 16:35 | 1514311 baby_BLYTHE
baby_BLYTHE's picture

I could never live with myself if it came to the point I was dependent on the government. Honestly, I would rather starve.

No debt, living on one's means and no credit cards for major expenditures is good sound advice for anyone.

Tue, 08/02/2011 - 01:24 | 1515821 StychoKiller
StychoKiller's picture

Check out/buy:

"Uncommon Cents - Benjamin Franklin's Secrets to Achieving Personal Financial Success", ISBN: 0-939817-06-3, by Lynn G. Robbins

Hint:  Pay yourself first by taking 10% of each paycheck and saving it (somehow!)

Tue, 08/02/2011 - 10:55 | 1516694 baby_BLYTHE
baby_BLYTHE's picture

cool. thx. I'll check that out. Franklin is my favorite founder :>

Mon, 08/01/2011 - 13:35 | 1513457 Commander Cody
Commander Cody's picture

You are steps ahead of the others.  Stay focused and prepare for the debt implosion.

Mon, 08/01/2011 - 11:22 | 1512706 Caviar Emptor
Caviar Emptor's picture

Agree. Now that they can't control through addiction, they'll revert to the old ways: force. 

Mon, 08/01/2011 - 11:26 | 1512715 falak pema
falak pema's picture

Well we see already how this global oligarchy play will occur to shift from demand/consumer side to producer/thrift side : 

1° Control WW media including Internet.

2° Control strategic resources, typically continuation of OIL/Arms/Money/Food/pharma play. 

3° Regulate the "resource limited" economy to their profit.

The people of first world, w/O their consumer power, w/o their political clout, will be toast trying to skimp off diminishing pensions and cut backed salaries.

The people of third world, (there ain't any second world), will fight to produce and bring down the labour rate world wide to bare nuckles economy. Grapes of Wrath times.

The fourth world will just be sold to the devil w/o any resource base, not even food and water. 

Until the Oligarchy sorts itself out.... Will take time. 

But the biggest millstone is lack of 'cheap' energy resources.

Mon, 08/01/2011 - 11:08 | 1512650 oldmanagain
oldmanagain's picture

Basically, consumption is not the cuprit if it goes into our economy. Ipods are made in China. etc. There's the rub.

 

Mon, 08/01/2011 - 11:39 | 1512794 FEDbuster
FEDbuster's picture

The real trick is to make the Ipods, Ipads, etc.. in the US, then sell them to China.  Those days seem to be lost forever, and with that goes our Country.

Hasten the Collapse, OBAMA 2012

Mon, 08/01/2011 - 16:24 | 1514274 Iam_Silverman
Iam_Silverman's picture

"make the Ipods, Ipads, etc.. in the US, then sell them to China."

My bet is that they would only buy.....one.

Then, we'd see knockoffs all over the world, and any advantage the U.S. had on price point or novel availability would be squashed.

Mon, 08/01/2011 - 16:42 | 1514317 Iam_Silverman
Iam_Silverman's picture

"Hasten the Collapse, OBAMA 2012"

Interesting idea - do you mean that the collapse will occur in 2012, or sometime after if Obama is re-elected?

 

clever attempt to disguise a double-tap post.....

Mon, 08/01/2011 - 11:10 | 1512653 DormRoom
DormRoom's picture

allowing consumers to borrow off future cash flow, helped owners of capital, by giving 1% of the US population, 10% of the national income. And this 1% used excess reserves to gain access to the body politics, and perpetuate the mechanism, which helped them accumulate vast wealth, in a quick, and scaleable way.

 

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