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Originally Posted by Fujiko
 GAH this whole post has just turned into Economics 101. Oh well, I'm not erasing it!
Without reading any of the previous replies, this is what I think: 1. After WWII, prosperty came about and households had more spending money. Simultaneously, Big businesses, with the help of psychology, crafted manipulative advertisements to sell more product. (I think they get more manipulative every year.)Which led to... 2. People bought "extras", and in the six decades since, we've gotten used to having "extras" (fancy purses, extra TV's, etc) (Not to say that these are evil, or that I don't partake as well, just sayin'.) Which led to... 3. Shopping became the New American Pastime. When my DH and I are bored at home, we go to the mall (even if we don't buy anything 90% of the time.) Extras are now almost as important to Americans as having the necessities, because of wanting to fit in, and because of a sense of entitlement. Which led to... 4. "Keeping up with the Jones'". Which led to... 5. People became willing to go into debt (use credit) to fund "extras" they couldn't afford. (Personal Finance, at least where I'm from, is not taught in schools and many parents aren't a good example of how to handle money. So lots of people are simply ignorant when it comes to money and credit.) Which led to... 6. Credit companies realized how loose people had become with their money, and realized they could make like a gazillion dollars off of them. So they a.) opened a boatload of new credit accounts for boatloads of consumers, and b.) through advertising, they made having credit cards (and the debt on them) "normal", something the Jones' do! AND... 7. While it may have started small, with small goods and services, soon people became even more loose with their credit, and started buying cars they couldn't afford (thanks to the overly greedy creditors) and then houses that they couldn't afford, too (thanks to the overly greedy mortgage lenders) (which caused the booming real estate market) Which led to... 8. A crap-ton of debt in America. ("But everyone has it!") That people ALREADY couldn't afford or handle. THEN, a. fuel prices went up almost 200% in six or seven years due to many different reasons, which lead to... b. consumer goods and food prices going up, especially in the last year and with no rest in sight And now people can't pay the mortgage they couldn't afford in the first place, nor can they gas up their vehicles (that is likely financed, possibly having problems paying the car payment itself). And if that's not bad enough they may have to go hungry so that their children can eat. Bills are unpaid on a nationwide scale, creditors don't get their money, and banks fail, people panic, stop buying so much (at least temporarily), business profits go down, prices go up, people lose their jobs because thier companies can't afford to pay them, more bills unpaid, completing the circle. ANYWAY to answer the OP's question, I think there were a lot of different factors that turned into a few big problems that are forming one big crisis. It's like the perfect storm. Yes, I think at least one reason why fuel (and hence food and other goods) is now so expensive is that investors (especially people that already have boatloads of money) saw the credit crapstorm coming, and realized one of the last places people would cut back would be fuel, so they started investing heavily in oil futures, and then people started jumping on the bandwagon. Of course there are many other factors other than this that contributed to the problem, though. ETA: ITA diamond lil, I forgot about ethanol. Doesn't it take more energy to make ethanol from corn than it actually has in it? That, along with precious farmland, makes it a big huge mistake. I like this thread, there's a lot to think about. I love how there's such a great dialoge here, and maybe someone who reads it will take a step back and reevaluate how they are living their lives (and hence how they are teaching their children how to live, since kids learn most effectively through example). |
