Five years after U.S. investment bank Lehman Brothers collapsed, triggering a global financial crisis and shattering confidence worldwide, families in major countries around the world are still hunkered down, too spooked and distrustful to take chances with their money.
An Associated Press analysis of households in the 10 biggest economies shows that families continue to spend cautiously and have pulled hundreds of billions of dollars out of stocks, cut borrowing for the first time in decades and poured money into savings and bonds that offer puny interest payments, often too low to keep up with inflation.
"It doesn't take very much to destroy confidence, but it takes an awful lot to build it back," says Ian Bright, senior economist at ING, a global bank based in Amsterdam. "The attitude toward risk is permanently reset."
A flight to safety on such a global scale is unprecedented since the end of World War II.The Huffington Post
The implications are huge: Shunning debt and spending less can be good for one family's finances. When hundreds of millions do it together, it can starve the global economy.
Families 'Scarred' From Financial Crisis Still Afraid To Spend
Bernard Condon | AP
Everyone trying to devalue and export their way out while enforcing austerity domestically. Not working.
3 comments:
The paradox is, to escape the consumerism, greed and corruption that is pervasive in our system we need to reduce spending…which will then unemploy us.
One part of a strategy is to reduce spending on any goods or services which are high-profit and try to support local, employee-owned and cooperative enterprises… which will be especially hard in an age of high-tech gadgets like smartphones, tablets, TV's etc.
If we can't we should try to keep what we do buy for much longer…consumerism is a kind of disease, like gambling.
We need an AA for consumers.
Bottom line is that capitalism does not work without government providing the surplus to rentiers. Most of the rentiers are too dumb to realize this.
Everyone thinks in terms of conceptual models that are cognitive and affective and rest on both positive and normative assumptions. Most people assume that the best socio-economic system is capitalism and capitalism is based on production resulting from investment. They also think that money comes from productive activity. They assume that exports add to the growth and government subtracts from growth and distorts prices causing inflation. They also assume a loose form of Say's law in which all money is spent either in consumption or investment and saving funds investment, so thrift is good and there is no such thing as demand leakage to saving. (I was just reading a critique of "Keynesianism" along these lines at ZH yesterday.) It's a simple neoclassical-Austrian model, Austrian economists having been among the founders of neoclassical economics.
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