Diatribune

The Overspent American: Why We Want What We Don't Need

copyright © 2007 Betsy L. Angert. BeThink.org

It was a lovely June morning. I was watching Cable News Network when Wall Street Correspondent Susan Lisovicz appeared and reiterated her summary of two economic indicators. One report was astounding and not good. The other optimistic, or not, depending on your point of view or how deeply you probed. The two were connected in my mind. Foreclosures were up, way up. Consumer spending was as well, slightly in contrast to an earlier slump. Three [3] billion dollars worth of wares are nonchalantly walking out the doors of the nation's largest retailer, Wal-Mart. However, this was not mentioned in the morning broadcast. What does it all mean?

People were purchasing products. A few bought for their homes. However men and women, for the most part focused on necessities. Of course, there are the "super-rich," the extremely affluent. These wealthy wonders are unscathed. They continue to consume with abandon.

However, for hundreds of thousands, the masses, there is no comfy habitat to fill with goodies. Home improvements are a construct of the past, their past. Many Americans could not and cannot make necessary repairs to what once was their pleasurable palace, their meager plot of land. The bank rescinded the homeowner's claims to "their" property. Under current economic conditions, life for many American is a crisis.

Citizens of the United States, the world's superpower feel powerless. Consumer debt is high. Financial stability is faltering. Personal liability is languishing. Credit cards charges exceed rational limits. Our countrymen cannot function as they once did. Flittering funds about is not practical; today it is not possible for most. The sub-prime debacle burst the American bubble. The bricks and mortar began crumbling when first-time homeowners were given opportunities they could not afford. The home market alone is not affected. Every aspect of our lives is intertwined with each other. Our income influences our purchases. The cost of living is tied to take home pay, benefits, the expense of doing business, the price of goods, gas, and the buying power of the public. Nothing stands in isolation.

Today we all reap the rewards of our earlier reckless disregard for the dynamics that govern each event we experience. In the words of Alan Greenspan, a man that does not often speak for me, this is the result "irrational exuberance." Today, this is the news in brief.

Foreclosures jump 90% over last year.
Figure pushed up by slowing real estate market, subprime meltdown.
June 12 2007: 5:29 PM EDT

NEW YORK (Reuters) -- Home foreclosures in May jumped 90 percent from a year earlier, reflecting a poor spring housing market and foreshadowing even higher levels later in 2007, real estate data firm RealtyTrac said Tuesday.

The May foreclosures - a sum of default notices, auction sale notices and bank repossessions - totaled 176,137, up 19 percent from April, the firm said in its May 2007 U.S. Foreclosure Market Report.

"After a barely perceptible dip in April, foreclosure activity roared back with a vengeance in May," James Saccacio, chief executive officer of RealtyTrac, said in a statement.

"Such strong activity in the midst of the typical spring buying season could foreshadow even higher foreclosure levels later in the year," said Saccacio. "Certainly not every community nationwide is seeing an increase in foreclosures, but foreclosed properties are becoming more commonplace and adding to the downward pressure on home prices in many areas."

RealtyTrac said there was a national foreclosure rate of one foreclosure filing for every 656 U.S. households during May.

The second report Lisovicz discussed seemed to affirm the Administrations assertion, the economy is strong. Spending increased in May 2007, well more or less. If anyone were to read the numbers carefully, they would clearly understand being better than bad is not the best.

Consumer spending rises slightly in May
By Anne D'Innocenzio
Associated Press
Thursday, June 7, 2007

NEW YORK — Americans shopped hesitantly in May, giving retailers some relief from a dismal showing in April but still raising questions about how strong consumer spending will be in the months ahead.

As the nation’s merchants reported results Thursday, the disappointments included Wal-Mart Stores Inc., Macy’s Inc. and teen retailer Abercrombie & Fitch Co. Costco Wholesale Corp., Kohl’s Corp. and luxury retailers like Saks Inc. beat expectations.

“It was clearly a bounceback from April. ... It wasn’t a blowout, but the gains were a solid snap back,” said Ken Perkins, president of RetailMetrics LLC, a research company in Swampscott, Mass. Still, Perkins and other analysts said the performance reflected a slowing consumer spending trend.

The ICSC-UBS sales tally of 51 stores rose 2.5 percent in May, down from 4.5 percent a year earlier but a sharp improvement from April’s 1.9 percent drop. The tally is based on same-store sales, which reflect business at stores open at least a year and are considered a key indicator of a retailer’s health.

“It’s a slowing trend that we have been seeing since February,” said Michael P. Niemira, chief economist at the ICSC. From February through May, the index averaged a 2.2 percent same-store sales gain, compared to the 4.1 percent average in the same year-ago period.

Well, this data is not the worst. It is what it is. America is under siege. We have built a barrier around ourselves. In our desire to quench an insatiable thirst for things, we have created a system that allows for a pretense of purchasing power. We collect goods and serve few. Citizens of this country or civilians overseas suffer.

In our desire to have, to hold, and to consume gross quantities of clothing, furniture, computers, compact discs, on, and on, we have made life extremely expensive. Granted the goods are cheaper, then cheaper still; and while the quality is questionable, that is another discussion. What matters now is the means for achieving the ends are perhaps, not practical or ethical.

Companies, catering to, or pandering to our cravings cut services. Corporate moguls lay off workers, reduce benefits, and out-source manufacturing. Here and abroad, laborers are not appreciated or treated tenderly. Human toil, sweat, blood, and tears are not honored. These characteristics are not valued.

Profits and earnings take precedence. Guaranteed employment with dignity is an antiquated concept. Production with man in mind in non-existent. Money is the great motivator. Dollars are more significant than human life and sustenance. Sadly, we have few funds to provide nourishment or to purchase the materials that we need.

As I reflected further, I concluded, what is occurring daily, people are out of their homes and buying more makes sense. There was a discernable relationship between the two reports. It seems, now that people are no longer strapped with mortgage payments that are beyond their ability to pay, they can afford to go shopping. However, the average Joe or Jane can only shop in stores that advertise lower prices.

Wal-Mart, arguably, the most serious corporate offender, exploiting an expectant public, is the preferred proprietor for many. In fact, this company was also in today's news. I discovered that indeed merchants are seeing more customers in their stores. Stock is "flying off the selves." Commodities are placed into shopping carts. However, people are not buying; stealing sounds good when you are down and out.

Wal-Mart facing theft costs at $3 billion or more
By Anne D'Innocenzio,
Associated Press Writer
Article Last Updated: 06/13/2007 05:06:11 PM PDT

NEW YORK (AP) _ Shoppers at Wal-Mart stores across America are loading carts with merchandise _ maybe a flat-screen TV, a few DVDs and a six-pack of beer _ and strolling out without paying. Employees also are helping themselves to goods they haven't paid for.

The world's largest retailer is saying little about these kinds of thefts, but its recent public disclosures that it is experiencing an increase in so-called shrinkage at its U.S. stores suggests that inventory losses due to shoplifting, employee theft, paperwork errors and supplier fraud could be worsening.

The hit is likely to rise to more than $3 billion this year for Wal-Mart Stores Inc., which generated sales of $348.6 billion last year, according to retail consultant Burt Flickinger III.

Flickinger and other analysts say the increase in theft may be tied to Wal-Mart's highly publicized decision last year to no longer prosecute minor cases of shoplifting in order to focus on organized shoplifting rings. Former employees also say staffing levels, including security personnel, have been reduced, making it easier for theft to occur. And a union-backed group critical of the retailer's personnel policies contends general worker discontent is playing a role.

Wal-Mart declined to offer any explanations for the rise in losses, but denied it has cut security staff and said employee morale is rising rather than falling.

Yes, life is good in America. Wal-Mart employees are content. There are plenty of sales associates on the floor. Customers are comfortable. They find all that they need in this big box store, and can leave without paying for the goods.

This makes sense.

By and large, our dynamic and innovative economy has helped Americans live better and more comfortable lives.

In a time when our President proudly proclaims fiscal strength, foreclosures, shopping, and stealing are rampant. Undeniably, we have a vibrant and inventive system. Fiscally, our decisions are sound. We understand how to spend and steal. I guess life is good when you cannot afford the roof over your head, when shopping is saved for those rare occasions when you can safely pilfer the merchandise. Yes, it was a beautiful day in June.

Economic News Reports and References . . .