SubscribeWhen American Express asked a sampling of 2,032 people late last month what they would do if they found $500, the answers were like a pitcher of ice water in the face of retailers. Survey respondents were offered a list of possible spending choices that included splurging at a restaurant, going on a shopping spree and taking a trip.Ugh, the contempt of these wallstreet people for the average Americans. It's like, how dare these people not fork over all their money plus money plus money they don't have to us so we can make ourselves richer! Their goal is to extract as much wealth from ordinary people as possible, ensuring those ordinary people have as little for themselves as possible.
But a mere 10% or fewer marked one of those items. Most went down the list and checked off paying regular bills, reducing credit card debt or simply saving the money.
"What we see consumers doing is exhibiting a level of discipline that we didn't know," said Gail Wasserman, a spokeswoman for American Express, which like other card companies has reinforced the reduced- spending trend by issuing fewer cards and slashing credit lines to lower their own risks.
But populist pressure is, ironically, forcing governments to behave much more "prudently" and "responsibly" than they ought to on purely economic grounds. Voters’ aversion to debt and deficits is creating irresistible political pressure to tighten fiscal policy even if such tightening is economically premature or unwise. This is especially true in the United States and Britain...
The upshot is that fiscal policy in many countries will probably be tightened faster than might be desirable from a strictly economic standpoint. But the good news almost certainly implied by such over-zealous fiscal tightening is that central banks will keep interest rates much lower for longer than many businesses and investors now expect...
It now looks, however, as if near-zero rates will be a fixture of global economic conditions for years to come. That, incidentally, suggests that homeowners and finance directors are making a costly mistake when they pay 5 per cent plus to "lock-in" fixed-rate loans, since short-term borrowing will probably be available at less than half that price for years ahead.
Regulators appointed by President Bush often have been more sympathetic to industry concerns about red tape than their Clinton administration predecessors. When James Gilleran, a former California banker and bank supervisor, took over the OTS in December 2001, he became known for his deregulatory zeal. At one press event in 2003, several bank regulators held gardening shears to represent their commitment to cut red tape for the industry. Mr. Gilleran brought a chain saw.Pre-Murdoch WSJ, via this blog.
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I believe he also did a media stunt where he claimed buying a house was a poor investment, and that he would rent forever and invest the rest in stocks. I suspect last year's shenanigans might have taken the shine off that strategy.
There is no dispute that household debt is too high, especially in Australia. The dividend from increased workforce participation from married women over the last two decades has largely been poured into residential property prices, for no net gain.
But Steve Keen is a grand standing attention seeker.
Unfortunately, some of the theory of the Austrian school economists he favours are very interesting, but he does them no service with his constant doom and gloom predictions.
posted by bystander at 11:42 PM on September 20 [3 favorites has favorites]