The Real Great Depression (Panic of 1873)

[EconProf]

One factor that will make this downturn worse than previous ones is peoples’ current use of credit cards as a substitute for savings accounts to cushion for emergencies.
A generation or two ago, people regularly saved about 8% of their paychecks, on average. This fraction was fairly constant for many decades until about the mid-1990s. Families tended to have a “rainy day” fund for emergencies: medical, car breakdowns, etc., as well as a growing fund for planned vacations, car and house downpayments, and retirement. As a result, people learned to budget, defer gratification, plan their future, and watch proudly as their nest egg grew.
Rampant consumerism encouraged by marketers and lenders changed all that. It was abetted by schools and parents that abandoned teaching the values of thrift, saving, and any other old-fashioned values.
Nowadays, emergencies are met by credit, as are vacations, vehicles, holidays, etc. So as deleveraging hits our big financial institutions with such pain, the same process will confront individuals now deeply in debt.
The ratcheting up of CC interest rates for missed payments, or the yanking of allowable limits is the whack upside the head many people need. Its going to hurt, but its time to sober up.

[Aecetia]

How Taxes Reduce Savings
by Daniel J. Mitchell, Ph.D.

“The fact that Americans save very little today should come as no surprise. Federal taxes–which are at an all-time high–significantly lower the income that Americans could save and use for capital formation. Even worse, the tax burden on savings and investment is much heavier than the tax burden on consumption.”

http://www.heritage.org/Research/Taxes/BG1309.cfm

[Aecetia]

How Taxes Reduce Savings
by Daniel J. Mitchell, Ph.D.

“The fact that Americans save very little today should come as no surprise. Federal taxes–which are at an all-time high–significantly lower the income that Americans could save and use for capital formation. Even worse, the tax burden on savings and investment is much heavier than the tax burden on consumption.”

http://www.heritage.org/Research/Taxes/BG1309.cfm

[Aecetia]

How Taxes Reduce Savings
by Daniel J. Mitchell, Ph.D.

“The fact that Americans save very little today should come as no surprise. Federal taxes–which are at an all-time high–significantly lower the income that Americans could save and use for capital formation. Even worse, the tax burden on savings and investment is much heavier than the tax burden on consumption.”

http://www.heritage.org/Research/Taxes/BG1309.cfm

[Aecetia]

How Taxes Reduce Savings
by Daniel J. Mitchell, Ph.D.

“The fact that Americans save very little today should come as no surprise. Federal taxes–which are at an all-time high–significantly lower the income that Americans could save and use for capital formation. Even worse, the tax burden on savings and investment is much heavier than the tax burden on consumption.”

http://www.heritage.org/Research/Taxes/BG1309.cfm

[Aecetia]

How Taxes Reduce Savings
by Daniel J. Mitchell, Ph.D.

“The fact that Americans save very little today should come as no surprise. Federal taxes–which are at an all-time high–significantly lower the income that Americans could save and use for capital formation. Even worse, the tax burden on savings and investment is much heavier than the tax burden on consumption.”

http://www.heritage.org/Research/Taxes/BG1309.cfm

[yooklid]

While I agree with the point about the tax burden on consumption v saving, are you honestly suggesting that if people had more of their pay check, they WOULDN’T spend it?

What’s truly changed is people’s attitude to debt. It’s no longer shameful

[yooklid]

While I agree with the point about the tax burden on consumption v saving, are you honestly suggesting that if people had more of their pay check, they WOULDN’T spend it?

What’s truly changed is people’s attitude to debt. It’s no longer shameful

[yooklid]

While I agree with the point about the tax burden on consumption v saving, are you honestly suggesting that if people had more of their pay check, they WOULDN’T spend it?

What’s truly changed is people’s attitude to debt. It’s no longer shameful

[yooklid]

While I agree with the point about the tax burden on consumption v saving, are you honestly suggesting that if people had more of their pay check, they WOULDN’T spend it?

What’s truly changed is people’s attitude to debt. It’s no longer shameful

[yooklid]

While I agree with the point about the tax burden on consumption v saving, are you honestly suggesting that if people had more of their pay check, they WOULDN’T spend it?

What’s truly changed is people’s attitude to debt. It’s no longer shameful

[kewp]

What’s truly changed is people’s attitude to debt. It’s no longer shameful

I wouldn’t say that.

I would say its the attitude of *defaulting* on debt that’s no longer shameful.

People have absolutely no qualms about maxing out their HELOC’s and CC’s, then tossing the keys and declaring bankruptcy.

This is why the downturn is going to be much longer and the credit squeeze much tighter than most think. Nobody is going to get second jobs or stretch their budgets to repay debt. They will just default, en masse’.

Declaring bankruptcy due to excessive consumer consumption is the most shameful I can imagine, personally. I have no problem with throwing these deadbeats in debtor prisons for the rest of their lives.

[kewp]

What’s truly changed is people’s attitude to debt. It’s no longer shameful

I wouldn’t say that.

I would say its the attitude of *defaulting* on debt that’s no longer shameful.

People have absolutely no qualms about maxing out their HELOC’s and CC’s, then tossing the keys and declaring bankruptcy.

This is why the downturn is going to be much longer and the credit squeeze much tighter than most think. Nobody is going to get second jobs or stretch their budgets to repay debt. They will just default, en masse’.

Declaring bankruptcy due to excessive consumer consumption is the most shameful I can imagine, personally. I have no problem with throwing these deadbeats in debtor prisons for the rest of their lives.

[kewp]

What’s truly changed is people’s attitude to debt. It’s no longer shameful

I wouldn’t say that.

I would say its the attitude of *defaulting* on debt that’s no longer shameful.

People have absolutely no qualms about maxing out their HELOC’s and CC’s, then tossing the keys and declaring bankruptcy.

This is why the downturn is going to be much longer and the credit squeeze much tighter than most think. Nobody is going to get second jobs or stretch their budgets to repay debt. They will just default, en masse’.

Declaring bankruptcy due to excessive consumer consumption is the most shameful I can imagine, personally. I have no problem with throwing these deadbeats in debtor prisons for the rest of their lives.

[kewp]

What’s truly changed is people’s attitude to debt. It’s no longer shameful

I wouldn’t say that.

I would say its the attitude of *defaulting* on debt that’s no longer shameful.

People have absolutely no qualms about maxing out their HELOC’s and CC’s, then tossing the keys and declaring bankruptcy.

This is why the downturn is going to be much longer and the credit squeeze much tighter than most think. Nobody is going to get second jobs or stretch their budgets to repay debt. They will just default, en masse’.

Declaring bankruptcy due to excessive consumer consumption is the most shameful I can imagine, personally. I have no problem with throwing these deadbeats in debtor prisons for the rest of their lives.

[Author]

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