Romance, spending & the economic crisis: Some Vday-induced thoughts

Blah, blah, "love"


Blah, blah, "cherish"


Blah, blah, "chocolate"


Hey, wait! Chocolate? Now you've got my attention!


Actually, last night, I talked myself out of buying some chocolate because it seemed ridiculous to pay $3 a bag now when, in two days, I could get it at least 50% off.


So while I bide my time waiting for chocolate prices to plunge -- if only the stock market's prices were as reliable as grocery stock prices -- here are a few things to consider:


To quote my blogging buddy Brunette on a Budget,

"According to the Washington Post, the National Retail Federation's spending survey found that Americans plan to put up a total of $15 billion in the name of Cupid this year, or $103 per person. Granted, that's $20 less than last year, but it's still a far cry from macaroni-necklace territory, the paper says."

To me, this is once again proof that either Americans are even more short-sighted than we have ever given them credit for, or the average American is still doing a lot better than most media would have us believe.


Yes, it's much lower than retailers were hoping for. We were in a boom, now we're moving toward the "bust" end of the cycle. Businesses are experiencing the pain of financial contraction. In good times, businesses expand and hire a lot of people. In bad times, they have to pare back down to essentials. That means layoffs.


I'm not trying to be crass or flippant. Of course these layoffs have huge ripple effects across the economy. Of course people's lives are changed by this, rarely in a good way.


But I've always thought of economics as a cycle. As the old adage, "What goes up must come down." In terms of the human existence, the effect is far more nuanced and important. But the simple fact that something has tragic consequences rarely keeps it from happening.


And given all this potential tragedy, all this nervousness about job security and our shared economic future, what does it say about us that we are still willing to fork out $15 billion for a single day? (I try not to think about the total for more popular holidays like Christmas and Hannukah.)


Well, it either says either:

• We are the kind of patriotic saps -- er, Americans -- that are spending to keep the economy afloat, just as our politicians, economists and investment bloggers vehemently implore us to do
• For all our new-found frugality and housing-bubble-induced wisdom, we're still mainly a myopic, instant-gratification oriented group of people who will never truly learn to put our future security above a nice dinner and some overpriced flowers.
  

Honestly, I'm not sure which interpretation is worse.


And on that cheery thought I am off to eat some breakfast and prepare for our unValentine's Day. The boys have decided to see Friday the 13th. (My mom replied that gory movies aptly mirror a lot of romance: Someone delights in ripping someone else's heart out. I guess you see where I get my romantic sensibilities from.) After that, it's some greasy fast food and then home to have a few drinks and probably watch Christopher Titus's special "Love is Evil" along, perhaps, with some cheesy movies that we can heckle.


FYI, before you chide me for spending after that tirade, the movie will be seen with free passes thanks to Mom's MyCokeRewards account. The fast food will be out of pocket, but, hey, it's a holiday, folks!


And what better way to spend a holiday than at the carnival(s)? So here are a few blog carnivals that have been good enough to include me in their ranks. Read up while you wait for your discounted chocolate!


The Carnival of Investing Strategies

The Carnival of Debt Reduction

The Festival of Frugality

The Personal Finance News Blog Carnival

The Carnival of Everything Money

Dear retailers...

This has to stop. Frankly, it's getting embarrassing for everyone involved.


Look, you know, deep in your hearts, that the relationship is over. That you and consumers haven't really been in sync for awhile now. They're pulling away, cutting back. You barely see them anymore. And when they are there, they don't stay long or spend much.


I can only imagine how scary that must be for you, watching them grow more distant with each passing day (and industry collapse).


And in your fear, you try to lure them in with tawdry promises of discounts and sales. But, stores, even if these ploys do work, you know it's just staving off the inevitable. The consumers are using you. They're buying, yeah, but it's mostly sale items. And it's so obvious that everyone is just going through the motions. They come in only because they know you'll give them what they want: cheap stuff. After they got what they came for, they leave and go find another store all too willing to lower its prices for them.


You're deluding yourselves that you can go on like this. Yes, you're maintaining a relationship, but only in the most superficial of senses. I know it, the consumers know it, and it's time you know it.


Meanwhile, how long do you really think you can keep going like this? You know you paid a certain price for that inventory you're flagrantly discounting. How much lower can you go? How many losses can you afford when the consumers aren't sticking around for the regularly priced merchandise?


We all know that, eventually, you have to hit a stopping point. That's becoming increasingly obvious as your cheap come-ons get more and more transparent. Macy's, you know you do this: You sent out an "After Christmas" sale catalog (four days before Christmas, mind you) that was almost identical to your "Last Days Before Christmas" catalog. Same coupons, same morning discounts, same everything.


How long do you think you can keep fooling the consumers into coming back? Eventually, you won't be able to do anything more for them. They'll realize that they've already gotten the best you have to offer. And then they'll move on.


You think you can't survive without these sales-vultures? You were fine before everyone got so power-drunk with credit cards. You'll be okay again. It won't always be pleasant. You will probably have to cut staff. But you can't expect people in foreclosure to go deeper into debt. You'd just be fooling yourself.


I know it's far from your ideal scenario. I know it's not what you want to hear. But it's the truth. And the more you play this degrading charade, the faster consumers will see through it. So stop now, while you still have some dignity left. Don't be that cloying ex who calls every hour of the day, hoping to get back together. No one wants to encourage that kind of behavior. It's annoying and a little creepy.


No, retailers, you're better than that! Play it cool. Let them know you have sale prices sometimes. But they don't have to come. Ya know, whatever. You'll be around, and, hey, if they stop by, great. But you know what you're worth. You know eventually they'll want to come back for some new clothes or the latest shoes they've saved up for. They need you. It's just a matter of keeping your cool. Of not panicking.


And if none of this letter convinced you, then at the very least STOP CLOGGING MY MAILBOX WITH NEW SALES CATALOGS.


Sincerely,

A sales-vulture before sales-vulturing was cool,

Abigail Perry

Are the media being drama queens?

About a week ago, Tim opened a piece of mail and announced that our MyPoints card has increased our limit.


It didn't even occur to me until a couple days later how extraordinary that is. In this economy, my credit cards aren't cutting my limits. Quite the opposite. And they're not trying to sneak in higher interest rates through some back door channel -- although one card notified us that the rate is going up at the end of the year.


Yet all I read about (and hear about other people reading about) are woeful lamentations of countless Americans being turned out of their homes. Stocks plummeting. Card companies slashing limits and raising rates.


So what's a gal to think?


I think that perhaps we're all buying into the media coverage unquestioningly. It seems like no one is trying to quantify just what effect it's having -- and on which sectors of the population. Certainly, there are some major changes going on, as Wal-Mart's sales numbers have indicated. .


But instead of focusing on the question "How bad is it?" perhaps we should be asking "How many Americans will actually be affected? And for how long?"


Because the fact is that there are small rays of hope out there. They're just not getting much coverage. For example, gas is down under $3. But suddenly gas prices aren't the big story.


Yes, that's not enough to compensate for the hard times ahead. But, guess what? We already had the good times.


Like the spoiled children we are, Americans had their dessert first, and now we're aghast (and petulant) that we have to eat our vegetables. A fair number are even trying to get out of it, because the sugary desserts gave them tummy aches.


I'm not trying to minimize the suffering that will happen. I'm not trying to say it's all lollipops and rainbows. Things are bleak. Times will be tough.


But, listening to most news sources, you'd think we're looking at at least a half-decade of strife and uncertainty.


So I was honestly quite startled to find out that the actual prediction is about 18 months: until June '09.


Sure, it could last longer. Maybe it will. But for years and years of market highs and financial self-indulgence I think we can all weather a year and a half of tough times.


I'm not trying to bash the media overly. Editors and publishers go with what sells. And right now, what sells is doom and gloom.


That's because of our own attention spans. Most of us wouldn't click through on a story if the summary were: "Mildly distressing times ahead, but not for too long and not as bad as the Great Depression." But "1 in 6 homeowners 'Under Water'" will really get your attention.


The other big problem is that journalists, like doctors of a critically ill patient, have to prepare us for the worst-case scenario. Better to be too pessimistic than too optimistic. Because if you do better than expected, it can be called a miracle and the doctor's skill. But if you do worse, the family can have emotional pain and suffering -- and a good lawyer.


So the media tell us just how excruciating it's going to be. Stories fill us with details of average credit card debt, rises in defaults, and all that grim information.


So what does it all mean? It means things do suck in the short-term. And, much more importantly for our collective psyches, the future is highly uncertain. That means it's easy to get panicky.


But the upshot is that things may not be as horrifying as news coverage would have you believe.


Banks are being taken care of (mostly by other banks, which I don't love, but it sure beats having whole lending institutions call it quits). There's no Dust Bowl. And people who are in danger of being foreclosed on may be getting government help or settlements from places like Countrywide, whether or not we believe they deserve it.


In other words, while tough times lie ahead, our society isn't going to fall into an everlasting pit of despair. Can we all just remember that? Especially when the angst starts piling up?