To contact us Click HERE It hit me last night (in my sleep) that the economy is (as we all know) 70% consumer spending, and 30% government/business spending. Yes, the recession is causing a blurring of the lines, and the coming fiscal cliff is going to cause an outright flip-flop of those numbers: to 70% GOVERNMENT/BUSINESS spending, and 30% consumer spending. Obviously I have no faith that Congress will somehow fix this--they look forward to the rivers of money that will result!
What got me out of bed: where is that extra 40% of government/business spending increase coming from? Well, since the government is funded by taxpayers, that means WE are going to experience a doubling or more of our taxes to fund it, and have been on our way to experiencing that since 2008. Business spending is also funded by us, the consumer/purchaser/end user, and prices are going to have to rise to at least double what they were in 2008 just to allow business to increase their spending. Here's how I got there...
1. Taxes are going to rise--no doubt about it. To pay those taxes, businesses are going to have to raise prices in order to raise enough revenue to pay their own increased taxes themselves.
2. With the higher prices we've experienced since 2008, we've all cut back or re-prioritized our spending--this means no more business reliance on volume sales at low prices, like we've experienced up until 2008. Now, businesses have to capture profit ON EACH SALE, meaning the price per item has to go up (because the volume is gone). With taxes and the general cost of doing business climbing higher and higher, expect prices to follow (as they have been) just so the retailer can stay in business. Otherwise, businesses will close, and our choices as consumers will dwindle. Competition for business will no longer be BETWEEN businesses--it will now be between business and government over taxes, and business will lose.
I'm not saying anybody should spend what they don't have, or spend for spending's sake, but rather BE PREPARED FOR FURTHER STICKER SHOCK come January. We...I mean WE are where both sides of the economy equation money come from--from our taxes paid to various government coffers, to the prices we pay for various goods/services before tax is applied. We're going to be paying more to governments and less to merchants--or each other. You should already know where this is headed: more money to government coffers means more crazy, reckless congressional Black Friday-style spending on personal pet projects, and not enough attention or effort devoted to solving actual problems that affect us all.
If you spent your Black Friday shopping for yourself or others, and either stood in lines around the stores or took part in the combat that went on inside them, you should've given a thought to your pantry supplies rather than a cheap flat-screen TV or cell phone that's many-generation old. Yeah, you'll have hi-def surround sound to watch the zombie apocalypse in your living room, but what are you going to wipe your butt with, or eat, when the fiscal cliff edge crumbles, we go over it, and you lose your job? How's that phone gonna work if you can't afford to activate it or keep it going, or the TV if you can't afford cable or satellite, or even a digital antenna?
Black Friday shoppers would've better spent their time and money mobbing grocery stores and warehouse stores to get living supplies for next year, but no--they want the electronic shiny baubles NOW, and the rest can wait...but for how long? Who knows how long the fiscal nightmare will last? This could be the latest version of "the new normal" for all we know, and things could be getting worse as time goes by.
Will YOU be one of the people trying to hawk that 60" flat-screen TV in January or February because you lost your job today, and we went over the fiscal cliff--meaning no food stamps, no unemployment benefits, no benefits of any kind because Congress can't get its act together? Guess what? That $300 TV is now only worth about $50 at a pawn shop! How long do you expect to survive on that?
Forget trying to sell it yourself--with so many other people in the same boat, who's gonna buy it? Certainly not the people who learned to cut the cord back in 2006, 2008, or 2010
The recession isn't over--not by a long shot. The last 4 years has only been a basic training period. If anything, we look to be turning a recession into a Depression. Are you prepared? Sure, you might now be the proud owner of another electronic gadget, but what are you gonna do when your power goes out because you can't pay the electric bill? Can you eat it, or use it in the bathroom? No--it's just another useless bauble in a pile of useless baubles that fill your house, because you didn't think ahead.
Fiscal Cliff day not on your calendar? It should be. We had ample warning for months--more warning than Katrina or Sandy victims. While some of us were preparing for this time, YOU went shopping! Typical grasshopper...
Are you going to end up in some Tent City somewhere, just like the Depression folks, in wintertime? Don't think it couldn't happen! Ask any Dust Bowl survivors that are still around. This country rose the highest up the global economic ladder, so logic tells us we have the most to lose by falling even one rung. The fall will definitely be more than a mere rung, and it will be nasty--no government safety net-mattress at the bottom to cushion you, and you'll be falling with the added weight of that flat-screen TV or some other Black Friday purchase under your arm, which means you'll fall faster. Then, you'll be thinking that toilet paper is lighter, and you'll fall a little slower. Plus, if you land on the package, it'll cushion the blow somewhat...and in the end, you can still use it for butt-wipe--a win-win! But no, the view down is definitely better on a 60" flat screen TV, and you can text, update your Facebook status, and surf the web on the way...if you're still activated, that is. Anything to distract you from real-time reality...anything to escape without getting off the couch.
If you insist on holiday shopping, at least think ahead a little when it comes to buying for family and/or friends: the fiscal cliff looms for them too, and they might appreciate a gift of bulk-packaged toilet paper, some meat for the freezer, thermal underwear or flashlights for when their heat/power gets cut off, or maybe gardening supplies for next spring, so they can grow some of their own food. Let's begin the morph from grasshopper to ant with the biggest buying holiday in the nation, and eventually make it second nature--you never know whether the next emergency will be nature-made or man-made, or how long it will last.
Have your shopping frenzy, but let the gifts be much more useful stuff, and not just stuff for stuff's sake (to say "I bought you something"). Gift cards to a grocery store, perhaps? We were once gung-ho on gift cards. Membership to a warehouse store for a year? How about covering the energy bills for a month, or paying to get a utility turned back on? You know--stuff that doesn't break, go out of style, or isn't likely to be returned, become yard sale fodder, or become the next thrift store donation.
Think about unplugging the shiny-blinky-noisy Christmas machine and focusing on what's really important. Here's a book on how to do just that.
Go ahead--laugh. Like my older sister, you won't be laughing when it turns out you NEED the stuff, like when my dad bought a potty chair, and later umbrellas and sleeping bags, for her kids' Christmas gifts as they grew. He was thinking ahead when their own mother wasn't, and yes, these items got used heavily!
Who knows? Congress may pull its head out, and actually work to get this solved before January, but odds of this are low. Sure, they may even work to reverse the automatic cuts themselves in February--I have no faith. We re-elected a do-nothing congress, so that's what we'll get. It's what we deserve. It's just what we need to make us want to either sink or swim in these economic tides--it's just too bad some of us still don't even see the waterfall ahead, even at this last minute.
Message for 2013: Guess you should've bought toilet paper and food when it was still affordable...back in 2012, huh? Good luck trying to get it now--nobody wants your TV or phone (not even the pawn shops), and you should've spent some of your food stamp money on garden seeds while you still HAD food stamp benefits. Good luck trying to get that McJob, because Mickey D's is starting to slide downward, but I suppose there's always slave-factory Wally World...if they're even hiring.
That $600 i-Gadget you bought back in 2011, plus the $300-$400 spent on the 2012 model would've paid to stock the freezer AND for a pallet of toilet paper--too bad you chose to spend it so unwisely. All those Black Friday electronics purchases could've kept you off food stamps in 2012--hell, EVERY Black Friday purchase you ever made since the holiday was invented could've paid for you to go back to school and get that degree that could've landed you a better job, and you wouldn't be here now, at the bottom of the cliff with the rest of us, so badly banged up and bruised because you landed on rocks instead of a bed of Charmin.
Still distracted by shiny things, like the lights on a Christmas tree? Congress is, I'm sure. Maybe I'll send them a potty chair for when they start shitting themselves!