What if consumers do not want to borrow anymore?

Discussion in 'Economics' started by KINGOFSHORTS, Aug 17, 2009.

  1. And they decide to save instead and not overextend themselves?

    What if we reach the same levels as 1970's in terms of consumer borrowing levels and savings.

    Right now consumers are working towards shrinking the home balance sheet and building up some cash reserves.

    70% of our GDP was based on consumer borrowing and spending.

    So what will replace this?

    We will have to go back to exporting more if we want to make up for the shortfall.
  2. What are they saving it for?
  3. A nation that only consumes & doesn't save is a nation of losers. They'll be wiped out in no time.
  4. lrm21


    They don't consumers and businesses made that decision last year.

    However the government in its infinite wisdom has decided that is a terrible idea. Ergo its behavior for the last 12 months.

    The problem is consumers have decided not to borrow anymore, but the process of contracting the debt to a reasonable level lets say 35% of where we are at now, is going to take years and be enormously painful. As a result the government is graciously expanding its debt, except the government debt is really the consumers debt but..well its too complicated to concern anyone.

    Bottom line we are still in the early stages of the actual pain for most people.
  5. Fear of unemployment, unexpected expenses etc..

    What else.
  6. The more pertinent question is, "what if they can't?"
  7. Bob111


    when they can't-in US goverment steps in.:eek:

    Shaky consumer still needs Fed support

  8. Bob111


    i know, but US goverment says no,they dont'.
  9. And this takes you by surprise?
    #10     Aug 17, 2009