Home Economics

I was interested to read your blog. 20 years ago I had a book published on different economic concepts to point the way to a sustainable world economy. Someone who liked the book recently contacted me to suggest that I update and re-publish it as a blog. She set up the blog, and the book is nearly complete on the blog in a series of postings. Here is the link:

http://www.economicsforaroundearth.com

With all good wishes,
Charles Pierce

When individuals/tax-payers, corporations and government are saturated with debt, what can pull them out debt? When bank themselves are in debt, who can bail them out? So far, their debt has been shouldered by those Chinese whom they hate so much. What will happen when world stop's carrying America's debt?

The last thing that america needs is retreat from consumer spending. It is the consumer spending that keeps the american economy going. America needs more of it. More living beyond their means by consumers. World will will have to pitch in too to bail out american economy by buying more of american goods and services. That is why credit crunch can undo american economy unlike anything else, and that is why this credit crisis is so urgent and so scary.

Can Indians decouple their minds from Americans?


Charvak said 2500 years ago:
----
yavat jivet sukham jivet.
runam krutya ghrutam pibet.

(As long as you live, live happily.
Borrow money and drink Ghee.)
----

Thank you Charles- I am finding navigating from one post to the next a tad bit hard- sequentially speaking. Some of the articles are right on the dot with environment etc.

kerty- It is true that the American economic tentacles are sucking blood from around the world. Unfortunately, some of those arms are decaying right now.

I was reading this magazine my neighbor (who is 82) gets, called, reminisce. In there, there were articles by people who had gone through the great depression. One had written how it too him and his family 19 years to get out of penury!

what can I say, this "correction" had to happen sometime. hopefully the wisdom of the 21st century should make "bouncing" back sooner than later.

A great lesson in human greed, learned by everyone, even the generous!

Suanth- now that line explains the "demise" of the Indus civilization!LOL!

I agree that Americans are given into buying all kinds of stuff which they may use/not use. And the serving sizes of pretty much anything are humungous! A "small" drink at almost any place in the US is more than twice the standard quantity you get in India (or most parts of Europe). And if we think a Honda Civic looks huge here in Bangalore when compared to other cars, it is completely dwarfed by the average size of an American car. Even their washing machines are huge compared to Indian ones.

And every American family needs to have a gas powered lawn mower, an impressive collection of power tools (which even professionals in India would envy), and the more well-to-do ones need to have an RV, motor boat, trailer home, and what not. How many Indian families (even the super wealthy ones) have these, or crave to own these?

Take a look at the average American home garage and you know what I am talking about.

I would just like to say that if I wrote any such article containing any such wild overgeneralizations about Indians, you all would be all over me like white on rice.

is there a point to these crazy overgeneralizations, or what? because not every american is a crazed, maniacal over-shopping, "thing"-hording waster. I know that completely ruins your whole theme here, but it would be nice if you all remained somewhere close to reality.

and I know half of you will be like "oh I lived on a street where..." or "my cousin told me that.." but for fuck's sake then, get out a little bit more. or really, go somewhere a bit more sophisticated.

Meenakshi,

We were home-owners in St. Paul, MN before we moved here to Israel. We had a yard. If you have a yard, you need a lawn-mower. In the States, lawn-movers are gas-operated. If you look at the antique shops, you can find one that is mechanical, but most of us were worried about mowing the lawn, not rummaging through antique shops for ancient tools so as not to insult the millions without.

We had a garden shears, some good gardening gloves. We didn't buy much for power tools. I was never handy with tools. But I did keep the hand tools my father had when he passed away, and kept them in good condition. We still have them.

We didn't live in a rich neighborhood (by American standards) and our shed was not larded with junk. We had an electric snow blower (a gift), but most of the time, I shoveled the snow by hand - that way I got down to the sidewalk and nobody fell on ice.

We had, one car, one TV, one computer, one VCR, one vacuum cleaner (we had wall to wall carpet on most of the floors that came with the house). We budgeted - and so we never worried about money. And we paid off the credit cards in their entirety every month, so we never paid interest on them.

For all this, compared to what I see here, we were rolling in the lap of luxury.

Why do I share all this? Well, not all Americans are hoarders and pigs (though many are), not all Americans are wastrels (though many are), and in spite of the richness of the country, not all Americans are rich. And my evidence is drawn from my own life, not anecdotal tales or that fountain of "truth", statistics.

I lived on the street for a year in the States, so I know what it is to do without a roof over my head.

For all this, in spite of all this, I have to say that too many Americans have deluded themselves over the years that they are richer than they are. And a painful payment that is long overdue is overtaking them.

what I think is ridiculous about this whole thing is this smug sense of superiorty that people seem to have about the economic crisis here. Like "oh this could never happen in X, and it's happening because all americans are greedy pigs."

if this makes all of your feel better,go ahead and think it. but 95% of the people i know are honest, hard-working, fairly frugal people who are being hit hard because of a situation that had nothing to do with them.

I work my goddamned ass off. I support my family on one salary because my husband is studying. We have 4 credit cards and not one carries a balance. We have a good retirement plan and savings. We have some new toys and some second hand ones for the baby. Once in a while I splurge on expensive shoes. We drive a second hand car, and we eat out about once a week, but nowhere ritzy. I fully intend on a European vacation sometime in the next year. Our house is not crammed with gadgets, although I do love to buy cookware and my husband likes camera equipment. That lifestyle mirrors almost all the people I know, and if that to you is gluttonous, then you're warped. I think it just makes some of you feel superior to trot out your own lives and somehow think the rest of the world needs to be exactly like you!

and please, this whole bullshit about how indians all live frugally but americans are such pigs just does not ring true. I have seen indian families spend money they simply did not come close to having for one wedding, I have seen a woman next door to me (a single woman) have 6 servants, 3 cars and an auto, I have seen all kinds of blatant consumerism and spending above one's means. oh yes, and by all means, blame that on america, too.


I do agree, yes, some Americans spent more than they had... lived above their means. um, can any one of you claim that you do not have any glitches, any flaws?

what I think is ridiculous about this whole thing is this smug sense of superiorty that people seem to have about the economic crisis here. Like "oh this could never happen in X, and it's happening because all americans are greedy pigs."

When the market crashed in 1929, the London papers were almost giddy with joy - at last the Americans were getting their well deserved comeuppance. A week later, the British papers were singing an entirely different tune as the enormity of the collapse hit them.

ruvy... yep, and that too. the happy tunes people are singing about this collapse are sickening. why would people wish hardship on the average american? I know it's so much more fun to demonize us as one big lot, but it is simply ridiculous and petty and uneducated.

smallsquirrel,

The happy tunes that folks overseas are singing are sickening. But some of us ex-pats have been warning of this for quite some time. The coming financial collapse in the States is nothing for me to dance over. How will my sister (78 years old) get by? How will my nephews, trying to help kids in college get by? My grand-nieces and nephews, seeing bright careers ahead of them will see only hard times.

But, little as I like it, and as much as I've warned of this, it is still coming. Worse events, even, may be coming as well. But let's stick to one disaster at a time....

This is for you smallsquirrel - and for the rest of us when the storm hits here as well. From a failed 1929 musical called "Chasing Rainbows" Happy Days Are Here Again

Ruvy

This crisis is not abstract. It is for real. World's markets have lost trilions in last week alone. These are money that real people had in their portfolio. The problems america faces are real and its consequences for people who are not americans are real too.

Is it time to de-link world's economy from American economy? So that when American economy sneezes, rest of world does not catch cold. Is it time for other nations to do things differently? Should American economic model be copied by other nations or should other nations create their own and try to de-link it from American economy? These debates are bound to take place outside USA and most of it will be critical of what is going on in America. No way, you can avoid it.

but the rise of the yuppies in india has just begun and so has their spending sprees, the materialism, the shallowness and indulgence in luxuries. its inevitable. let them have fun for now.

kerty, no one is arguing against those points at all. we were talking about something very different.

and anand, I am sorry but not everyone thinks the same as you do. It is not morally wrong to buy what you might consider luxury items, as long as it is done with discretion, limitations and sound reasoning. You do not have to do it yourself, but the smug judgment is kinda silly. but when you say things like you did, all it sounds like is bitter jealousy.

Kerty,

There is nothing abstract about a financial crisis. Remember, I lived on the street in the freezing winter of Minnesota. That was just a flicker of the hell we will all go through when the money crashes.

And crash it will.

There is no way you can de-link yourself from the American economy. Too many people have too much invested in it. When it blows, it will first seem as if the euro and sterling are safe - and then the euro and sterling will sink, as will the money of China and Russia. Eventually, we will all have to seek out something more solid than pretty paintings of Benjamin Franklin (the $100 bill US). Don't fool youself into thinking that it can be the paintings on the Indian Rupee or the New Israeli Shekel. They will all be just greasy toilet paper.

We will be back on the gold standard, using gold to pay for this and that, and troy scales to weigh the stuff out until someone figures out a uuniversal coinage that we can rely on.

That is first off. But what I believe that smallsquirrel is talking about is condemning Americans for trying to survive on their own terms in their own country - even though the rest of the world is a whole lot poorer than the Americans are.

My 83 year old father-in-law was three when the market crashed in New York. He grew up in hard times, fought in WWII, served in the Air Force Reserves and did his best to feed four children and raise them to be decent human beings. He figured out how to make money on the stock market, and used every trick in the book to build financial security for himself, his late wife, and his four children.

If the money crashes to bits next year (in late 5769, mid 2009), as many predict it will, he will be reduced to penury. How is he going to start over again at 83 years old suffering in poor health with degenerative heart disease?

Is it better to have suffered all your life in poverty - or to have been elevated from it for a time, only to be dashed upon its shoals in your old age, when you are too sick to do anythng about it?

I don't have the answer to that question, Kerty. Do you want to consider it?

Ruvy

"There is no way you can de-link yourself from the American economy. Too many people have too much invested in it. "

While it is true. Rest of the world does not have to resigned to such fate for ever, even after warning sings are flashing.

I agree, trashing gold standard was a major blunder, but that is history. World will not return to it.

"I believe that smallsquirrel is talking about is condemning Americans for trying to survive on their own terms in their own country"

I think people are criticizing culture of consumerism, living beyond their means, culture of debt and credit - some may not be very articulate how they express it.

"Is it better to have suffered all your life in poverty - or to have been elevated from it for a time, only to be dashed upon its shoals in your old age, when you are too sick to do anythng about it?

I don't have the answer to that question, Kerty. Do you want to consider it?"

I do not have answers either. All I know is that people deserve better.

#16- "but the rise of the yuppies in india has just begun.."

but the puppies have been doing it for a while now.

ss:

those who think they would remain unaffected if US economy collapses do not live on this planet

also

there is an ironic corollary:

reagon = gorbachev
osama = bush

SS: Think there is an element of schadenfraude...except of course there will be a fall out for the rest of the world anyway.

PS: apologies for the typos: it shoudl read "an element of SCHADENFREUDE" - things that keyboards do! sigh

anamika... I think that is exactly what it is.

and you might be on to something... maybe the word you used first means that people think they will get personal gain from enjoying the suffering of others (and all of it with a german accent) LOL.

SS- I reread my article and see no pleasure gotten out of the pain of americans or indians. (We have lost all our 401 k- there is no glee attached to that! )

this article was not written with the objective of laughing at someone's or in this case the world's economic troubles. On the contrary, it shows how as a whole, consumerism has brought about a unique case of living with more gadgets that appear as absolute necessities but did not take into considerations other impacts on the overall scheme of things.

As a world, we are at the crossroads with how we want to live moving forward. Do we want to continue to buy Abercrombie tees at ridiculous rates when equally good, generic stuff can be had for a fraction of the cost? This, by the way, was brought up by my dyed-in-the-wool american neighbor who lived through the great depression and feels that today, no body has any respect or value for money. She feels that much is wasted- at her church, in her own family- she finds it hard to please her grandchildren with gifts as their expectations are high- consmeristically speaking. For a lady who knows the value for each dollar, she cannot see herself "throw" away $60 for piece of clothing when she knows one can be had for under $10 on a sale.

I live as much entrenched in Middle class America as you. However, I do not bury my head in the sand and wish it all way- I wish I can do it though- So many of my friends are hurting- jobless, illness- health insurance co-payments, car insurance, 2 days back my friend got laid off- his company shut down. Fortunately for him, he has his house paid off- but being in your 40s and not having a job is not a joke. He has no savings to speak of.

He used to have a boat that he finally sold this summer as he couldn't afford to drag it behind his car owing to the gas price spike.

I can go on- last year alone I gt 3 offers from 3 of my american friends who own vacation homes- they couldn't keep up with the mortgage. Of course, I refused as I knew I cannot make those payments either.

All of us- irrespective of being Indian or american need to know what we can afford and then go for it. The sad part of "modern" economics is it is a basic unwritten human right to spend beyond your means as if a "higher" quality of life is your right! That is where the problem is!

If you can afford that european vacation without breaking the bank, great! However, I also know of my friend who was so stressed because of losing her job and her husband, his, they spent all their savings and ran up another $6k on their credit card and went on a cruise in the mediterranean in the summer as she needed to "de-stress"! (her husband is yet to get a job" and she is yet to pay off her credit card.

Consumer credit in america is scary. Don't ask me- ask Susie Orzman! They don't come more blond and blue-eyed than her!

a case of history repeating itself. this too shall pass...

a case of history repeating itself. this too shall pass...

I don't think so, Shanky. I remember the "crash" of 1987, the stagflation of the early 1970's in the United States, and have heard nightmare tales (funny now) about the hyper-inflation that befell this nation in the late 1970's through the 1980's. The Israeli pound that I spent in 1973 as a tourist here had become the "shekel" under Prime Minister Begin in 1977, and by the time the late 1980's rolled around, it was necessary to lop three zeros off that shekel to get the "new shekel" presently in use.

Things will be different this time round, I'm afraid. America is not as stable as she used to be, and things that Americans take for granted may not occur.

One can borrow and delude onself as to one's wealth for only so long - eventually reality sets in. And as the old saying goes, "the higher they go, the harder they fall." As you can see from my previous comments, there is no Schadenfreude in what I say.

Ultimately, Meenakshi is right in her condemnation of the culture of consumerism. It has robbed Americans of the understanding of the dollar that was once pretty much universal. And smallsquirrel is right to defend people who work like dogs just to keep up with the deck chairs as they tumble off the side of the Titanic that is the sinking American economy.

And there will plenty of tragedy and pain before things get better.

blokes, I will overlook the hideous insinuation you made when you asked me trust Suze Orman instead of you.... it was really below the belt and unwarranted. I myself am not blonde haired or blue eyed, so please spare me the racial undertones.

look, the comments were not directed at you in particular. and in no place did I ever say that americans should not tighten their belts. And I never said there was not a credit issue here either. I simply said that the allegations that every american lives like royalty on the wages of a carpenter and deserves this fall-out were nasty.

but at the end of the day, we do not have the same ideas about things. I agree that people should live within their means; and for me, if that means I can afford a $300 purse once in a while that is MY business.

Dear Meenakshi,

Very well written. I am planning to write an article on this very topic, looking at what caused it in the first place.

It is not about how we Indians are superior. We have our pluses and minuses just as Americans. It is about observing what's happening today, and how can we learn from it. India is probably now where America was in the 50s and 60s. I am seeing the same tendencies among the younger generation in India of reckless overspending and consumerism. But such subtleties are lost on SS and in her usual manner she goes catatonic about the imagined slight. Don't mind her, she just livens up the discussion, though unintentionally.

Regards,

Ravi Kulkarni

Oops I meant ballistic, catatonic hardly applies to SS. My apologies SS.

Ravi

thanks ravi, cause you obviously failed to comprehend the point I was making. but the personal attacks were oh so nice.

grow up.

Dear SS,

Not to belabor the point, but here is your comment:

"but for fuck's sake then, get out a little bit more. or really, go somewhere a bit more sophisticated."

Regards,

Ravi

ooooooooo I get it! when people make wild overgeneralizations about Indians it is OK to be outraged. but when others make ridiculous generalizations about americans, that is quite alright.

and the comment was more directed at ledzius than blokes. but that is beside the point.

I guess then the only overgeneralizations that are perfectly acceptable are about the Chinese, right?

Shanky: Yes, in the grander scheme of things, 2008-2009 will appear as a blip in the screen!

Ruvy: You put it very succintly: Meenakshi is right in her condemnation of the culture of consumerism. It has robbed Americans of the understanding of the dollar that was once pretty much universal. And smallsquirrel is right to defend people who work like dogs just to keep up with the deck chairs as they tumble off the side of the Titanic that is the sinking American economy.

Adding to that, my worry about consumerism is in the context of global warming. I got interested in economics after I started delving into the field of environment!

Ravi K: Do send me your links when you get those articles published. Yes, this time around the Americans are "starring" in this mess. In a few years it would be the Indians and the Chinese: every dog has his day (a bad day, in this case!)

SS: If you read my original article, I end it with a note of caution to INDIANS to be careful with their spending! I am NOT generalizing that indians are epitomes of saving! No! The modern Indian generation is as consumeristic as its American counterpart. This entire article was NOT about superiority- it is about how we need to learn our lessons. Right now, the case at hand is the American economy. Just as Indian Politics stinks, so does American Economy!

I don't think there is any superiority-inferiority mixed in the post. I know the blogger quite well, i should say and she has been like that always. Always counting the pennies and making sure nothing went waste and we saved as much as we could. I, on the other hand have been quite the consumer - i am Indian and now live in the USA!! But at the same time, I don't have anything that I don't need. I strongly believe that money is to help us enjoy not to get greedy. The problem of America and india is following the same route, is that consumerism goes to an extreme. And yes, I am generalising. Just as India gets generalised as the country of sadhus and snakes. :) So, superiority/inferiority is just in the kaleidoscope that each one of us is holding in front of our eyes. The problem of the economy though is that too much greed will create a big fall - and we all get crushed in varying degrees! NOte: I think we can practice some restraint in our tones and be a little more polite on these comments. After all, we are just dicussing stuff!!! :)