Jay Evensen
  • Front Page
  • Opinions
  • Second Thoughts
  • Portfolio
  • Awards
  • About

Black Friday, Cyber Monday — No way to fuel a recovery

11/26/2012

0 Comments

 
Picture
So, let me get this straight. The United States is facing a “fiscal cliff” because its leaders have habitually spent far more than the government collects in revenue. Leaders of both parties agree that excessive borrowing, through deficit spending, is bad and must stop (although they have different ideas on the solution).

And in the midst of this, everyone seems to be holding their breath, hoping that Black Friday, Cyber Monday and the entire Christmas season brings in gazillions of dollars in consumer spending fueled mainly by credit card debt?

I could launch into a rant on the contradictions between what we expect from our politicians and what we expect of ourselves, but instead I will point out that the two sets of behavior are not unrelated.

If we fuel an economic recovery on unsecured consumer debt, is it really a sustainable economic recovery? Wasn’t that sort of spending, through risky home equity loans and debts that exceeded the ability to pay, a

big part of why the economic collapse of 2008 has had such a long-lasting effect?

Even if risky behavior by financial institutions, fueled by bad government incentives, was the main reason institutions teetered or collapsed, debts on a personal level made it much harder for people to weather the storm.

So now we are told that Black Friday sales were strong but not spectacular, but that online sales topped $1 billion. But we’re also being told, as this ABC News report said, that consumers “cranked up their use of credit cards in the third quarter.”

The report cited figures from TransUnion, a credit-reporting agency, that the credit card debt per borrower grew 4.9 percent during that quarter, as compared to a year ago, to $4,996.

Round that off to $5,000. That doesn’t seem like the kind of figure most people could pay off each month when the bill comes due.

On Forbes.com this week, Panos Mourdoukoutas wrote about good debt and bad debt. It’s pretty simple, really. Good debt buys something that will increase in value, whether that is an education that will lead to a lucrative career or a small-business loan.

Bad debt is money we borrow for things we don’t really need, and at terms that are onerous and, frankly, ridiculous.

Why do people accumulate bad debt? Mourdoukoutas said you can blame the emotional side of your brain. He quotes author Jonah Lehrer.

““Paying with plastic fundamentally changes the way we spend money, altering the calculus of our financial decisions. When you buy something with cash, the purchase involves an actual loss — your wallet is literally lighter.”

This blog by Anisha Sekar on USNews.com, says much the same. “Paying with cash gives that visceral feeling of forking over money, making you more aware of your purchases than an electronic transfer ever could.”

That’s sound advice. Unfortunately, with mobile devices increasingly being used to pay at the register, the world is moving farther and farther away from cash.

That’s too bad. Imagine if political leaders had a giant warehouse full of cash from tax revenues. They might feel a little differently when it all ran out and they had to go borrow more.

But that’s pure fantasy — just like imagining politicians being thrown off a literal cliff if they can’t reach a compromise by the end of the year.

0 Comments

Your comment will be posted after it is approved.


Leave a Reply.

    RSS Feed

    Search this site


    Like what you read here?

      Please subscribe below, and we'll let you know when there is a new opinion.

    Enter your email address:

    Delivered by FeedBurner

    Picture

    The author

    Jay Evensen is the Senior Editorial Columnist of the Deseret News. He has nearly 40 years experience as a reporter, editor and editorial writer in Oklahoma, New York City, Las Vegas and Salt Lake City. He also has been an adjunct journalism professor at Brigham Young and Weber State universities.

    Archives

    June 2021
    May 2021
    April 2021
    March 2021
    February 2021
    January 2021
    December 2020
    November 2020
    October 2020
    September 2020
    August 2020
    July 2020
    June 2020
    May 2020
    April 2020
    March 2020
    February 2020
    January 2020
    December 2019
    November 2019
    October 2019
    September 2019
    August 2019
    July 2019
    June 2019
    May 2019
    April 2019
    March 2019
    February 2019
    January 2019
    December 2018
    November 2018
    October 2018
    September 2018
    August 2018
    July 2018
    June 2018
    May 2018
    April 2018
    March 2018
    February 2018
    January 2018
    December 2017
    November 2017
    October 2017
    September 2017
    August 2017
    July 2017
    June 2017
    May 2017
    April 2017
    March 2017
    February 2017
    January 2017
    December 2016
    November 2016
    October 2016
    September 2016
    August 2016
    July 2016
    June 2016
    May 2016
    April 2016
    March 2016
    February 2016
    January 2016
    December 2015
    November 2015
    October 2015
    September 2015
    August 2015
    July 2015
    June 2015
    May 2015
    April 2015
    March 2015
    February 2015
    January 2015
    December 2014
    November 2014
    October 2014
    September 2014
    August 2014
    July 2014
    June 2014
    May 2014
    April 2014
    March 2014
    February 2014
    January 2014
    December 2013
    November 2013
    October 2013
    September 2013
    August 2013
    July 2013
    June 2013
    May 2013
    April 2013
    March 2013
    February 2013
    January 2013
    December 2012
    November 2012
    October 2012
    September 2012
    August 2012
    July 2012
    June 2012

    Categories

    All
    Campaign 2012
    Congress
    Crime
    Culture
    Iran
    Oil And Gas
    Poverty
    Steroids
    Taxes
    Utah
    Washington
    World Events
    World Events

    Links

    Deseret News
    Newslink
    Marianne Evensen's blog

Powered by Create your own unique website with customizable templates.