the economic stimulus package has been obviously created to appease the bush administration and government at large's golden calf of consumer spending. retailers were quick to jump on board, offering to cash the checks, and making sales deals clearly catered to the check. i distinctly remember being mildly offended last week while watching a circuit city ad that encouraged me to "stretch my stimulus check" and offered me a new computer for $599.99 (you get to keep that extra cent!).
unfortunately for all those peddlers of cheap, easily breakable, shiny pieces of plastic, we all got bills to pay, and the economy will still blow after we get our little windfalls. according to the new york times, we're going to collectively spend somewhere between one quarter and one half. not exactly what i'd call a shopping spree. however, fear not, investors. some people are prefer to answer the call to patriotic consumerism:
“We’re going to buy a 42-inch television,” said William Meiklejohn, a self-employed computer technician, as he strolled through The Falls, a high-end shopping center south of downtown Miami, set around palm-fringed pools.
His annual income has dropped over the last year from about $100,000 to more like $80,000 as the economy has slid, Mr. Meiklejohn said. But he and his wife own their home and their two cars clear of debt, he said. Their two children are grown and married. No sense stashing their $1,200 tax rebate in a savings account.
“If I spend it, it stimulates the economy,” Mr. Meiklejohn said. “If people go around paying off bills, it’s not going to make any difference.”
i'm not an economist, and i don't think any regular contributors here are either (rootless cosmopolitan, where the hell are you?). since when does paying off one's debt not stimulate the economy? if you really wanted to mobilize us good little consumers right now, wouldn't the best idea to get all this unstable debt taken care of, making all of our banking institutions more sound? how is choosing circulate money, thereby supporting a business, not moving the economy?
it really makes you think that this is just money from the government to help us maintain our serious bread-and-circuses habit. after all, why would you cause any kind of civil disruption (political or otherwise) in a declining country, when civil disruption in liberty city is so much more fun and free of consequence?
Monday, June 2, 2008
stimulus package goes flaccid
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2 responses:
Paying off bills doesn't stimulate the economy nearly as much as new spending does (or, ever better: new debt). The U.S. economy is debt based. How many jobs do you create just by being in debt? How many douchebags with finance degrees working at Morgan-Stanley would be out of a job if debt was sizeably reduced?
It's a vicious cycle that motivates inflation, which motivates people to work harder, which incentivizes purchasing (and debt) because people know that their money is losing value while it sits in low-interest savings accounts or CD's.
Your post and the comments on debt remind me of the great Herzog film - Stozeck where a little family of german immigrants decides to move to Wisconsin to escape some wicked pimps back in good old Rauslaund. They get a shiny new RV with a color tv and sign a bunch of papers with the local bank to help with the payments.
Of course it ends badly for everyone involved. The character played by Eva Mattes ends up turning tricks again and the protagonist goes crazy. Lesson of the film - don't get into debt in America - even if your shiny motor home looks pretty and the Coke flows in rivers from the vending machine. Film critics will mention that it is a scathing critique of consumerist capitalism but even simpler to me is the message - don't get in over your head because after a while when you end up working 18 hour days to cover your payments, it suddenly doesn't feel worth while to work for stuff. You end up working just to raise that load off your back so you can breathe.
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