Is this the fundamental problem of the economy: We have too much stuff?
That's the takeaway from a front-page article in The Washington Post headlined "Economy Strains Under Weight of Unsold Items":
The unsold cars and trucks piling up at dealerships and assembly lines as consumers cut back and auto companies scramble for federal aid are just one sign of a major problem hurting the economy and only likely to get worse.
The world is suddenly awash in almost everything: flat-panel televisions, bulldozers, Barbie dolls, strip malls, Burberry stores. Japan yesterday said its economy shrank at an 12.7 percent annual pace in the last three months of 2008 as global demand evaporated for Japanese cars and electronics. Business everywhere are scrambling to bring supply in line with demand.
That may be good news for shoppers who still have pocket money. But this raises a troubling notion: what is our economy based on when we're all shopped-out? If consumer spending is the engine of the economy, what happens when we run out of things to buy?
More from the article:
Some analysts say over-capacity is so rampant that it will stymie government efforts to unfreeze credit markets. Banks have little reason to lend not only because they still have bad debt on their books but also because businesses don't have a pressing need to expand, said Mike Shedlock, an investment analyst with Seattle-based Sitka Pacific who writes the popular blog Mish's Global Economic Trend Analysis.
"What is it that we need more of?" Shedlock said. "Do we need more Wal-Marts, more Pizza Huts, more nail salons?"
Strip malls and stores proliferated alongside housing developments, but many of those houses are empty; there were never enough people to fill them in the first place, and there won't be anytime soon.
It's not just that easy money and scruples-free lending practices led to the building of homes that we really did not need and that their buyers could not really afford. There's plenty of other things that have been produced--in China and elsewhere--for which there's no longer much demand. Fewer homes mean fewer furniture. And do fewer closets mean fewer clothes? Or toys? Or electronic equipment?
It seems like a years-long--or decades-long--spending spree could be grinding to a halt. Credit problems, bad banks, a collapsed housing market--all that may be only part of a bigger picture. It's as if a gargantuan Ponzi scheme--one in which consumers kept buying to load up on stuff that they didn't truly have the money for, akin to investors investing in a pyramid scheme for get-rich-quick payback--has crashed. If that's the case, what is President Barack Obama and his economic advisers to do? After all, Shedlock is probably correct; we may not need any more Pizza Huts and Wal-Marts--and all the empty calories and crap they peddle. But who in politics wants to sell that line?
ROCKET (FUEL) MAN. In case, you didn't see it when it was posted last week, please check out my investigative piece on how Richard Bryan, a former Democratic senator who had a pro-consumer reputation, became a well-paid lobbyist for corporate polluters. In particular, he lobbied to prevent Congress and the EPA from regulating perchlorate, an ingredient in rocket fuel, that has been dumped by military contractors and military bases into the water supply throughout the nation. It can disrupt the thyroid and cause neurological damage; EPA scientists have declared it a serious threat to infants. PropPublica selected the story as one of its best picks of the day. ProPublic has also done its own digging on the perchlorate front.
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Comments
George Carlin re "Stuff"
http://www.youtube.com/watch?v=MvgN5gCuLac&eurl=http://www.buzzflash.com/articles/analysis/630&feature=player_embedded
Posted by: camera
| February 17, 2009 12:27 PM
It is called "Suppy side economics" also known as the voo-doo that the GOP do so well!
Posted by: capt
| February 17, 2009 12:49 PM
We don't have enough
clean water
clean air
clean energy
put people to work on all those "green" projects.
Posted by: David B. Benson
| February 17, 2009 3:20 PM
Here are a few more details on how the final economic stimulus bill will help bolster our economy while protecting our environment, reducing our dependence on foreign oil, and cutting global warming pollution.
The $26.86 billion investment in energy efficiency will help to kick-start the economy by creating more than half a million jobs and saving hundreds of billion of dollars in wasted energy costs;
The $18.95 billion it includes for green transportation, including public transit and high-speed rail projects, will put more than 300,000 people to work building the transportation solutions we need to cut greenhouse gas pollution; and
The $32.80 billion the bill includes for clean energy projects will help significantly reduce global warming pollution and cut down on pollution to rivers, lakes, and coastal waters, making them safe for drinking water, swimming, and fishing.
This is an important first step towards rebuilding our economy while protecting our planet.
saveourenvironment.org
Posted by: capt
| February 17, 2009 4:51 PM
Obama's other big problem:
"The Most Powerful Single Black Individual That’s Ever Walked Planet Earth" -- Historian Puts Obama in Context
http://tinyurl.com/banumc
*****
Racists and white power nutjob's heads are exploding!
LOL
Posted by: capt
| February 17, 2009 9:32 PM
"...what is our economy based on...?"
Debt...and continuing escalation of debt...
No kinda solid ground at all...
Welcome to the real world of insolvency.
-T
Posted by: Hajji
| February 17, 2009 9:41 PM
Hajji,
But it is the new and improved Debt version 4.1!
(with added stimulation!)
Posted by: capt
| February 17, 2009 9:54 PM
control the money and you control the people.
install your puppets in the govt and you control the laws.
install more puppets in the media and no one is the wiser.
Posted by: as_if!
| February 18, 2009 8:10 AM
The Obama stimulus plan is attempting to inflate the same credit bubble that just burst and it will fail because our whole economic system must be overhauled ~ starting with our insolvent banking system which still hasn't dealt with $175 Trillion in Derivative debt
THE OBAMA STIMULUS / FACTS AND FICTION
http://blogs.salon.com/0002255/
Posted by: as_if!
| February 18, 2009 8:30 AM
Recommendation to stimulate the economy.
Who likes to go shopping, from "coast to-coast", armed with a credit card (specifically a GOP credit card )?
Posted by: Arcadia
| February 18, 2009 9:03 AM
THE OBAMA STIMULUS / FACTS AND FICTION
Odd - no mention of Obama's race?
THE BLACK OBAMA ...
lol
Posted by: capt
| February 18, 2009 9:50 AM
So the solution is for everyone to buy as much as they can in the next 4 weeks. That would deplete inventory and create a demand for more products. So fill up those credit cards now, America.
Posted by: steven corn
| February 18, 2009 10:11 AM
Our society/economy is based on an uninterrupted stream of purchasing of non-necessities. So long as we are caught in the cancerous growth for the sake of growth cycle we are doomed to pyramid ourselves into inflation and bankruptcy.
Posted by: kalpal
| February 19, 2009 8:17 AM
The Republicans who refuse to take Recovery Money for their states and for their people, are like the "Grinch" who stole Christmas. The Party of No and endless negativity! They fail to see the great good the stimulus will accomplish but rather concentrate and speak on imaginary wrongs and evils, Invoking that old fear god, evil portents of tales which might never happen. Clearly, a death wish for them.
Posted by: bacaangel
| February 19, 2009 9:20 AM
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