Is It Time To Start Tightening Our Belt?
by James Glaser
July 21, 2008

I see people shopping in my gallery, and some of them want to buy a piece of jewelry or a framed print, but they are putting off that purchase. I know they still want to buy, as many of them end up buying something less expensive. That makes me wonder if they are cutting down on their spending because of debt, or has the inflated price of food a fuel taken away their ability to buy that bigger ticket item.

This quote comes from the New York Times in a story about the economy, and it is pretty easy to see that we could be looking at several years before things really turn around, and there is always that chance that that it could take a lot longer than that.

By the reckoning of, enough houses are on the market to satisfy demand for the next two-and-a-half years without building a single new one.

Well, you know that more and more houses are going to be built. Not as many as have been built during the housing bubble expansion, but enough to extend the excess supply for a long time. Some day in the near future, a lot of baby boomers are going to start getting out of their homes, and this glut of homes for sale is going to send the value of homes even lower.

Right after the terrorist attack on 9/11, President Bush asked the people of this country to go out and shop as a way of getting the economy back on track. He then went to Congress and got tax cuts for those at the top of the income ladder.

I am sure the rich did their part and spent every penny they didn't have to pay on taxes. The rest of America either took out a home equity loan, or they used their credit card, and we all went out on a buying spree.

Of course it wasn't just the American people out there spending. Congress and George Bush maxed out every credit card Washington had, and then they got credit line increases.

Like every spending spree anyone has ever gone on, realization had to hit some time. Many people have a spending hang-over, and that sick feeling you get from any hangover is going to last for a long time.

Right now Washington is trying to figure just how many financial institutions is can bail out, and which ones it can let fail. If you are a small business, nobody is going to give you a helping hand to ride out this downturn, but if you are big, big like Bear Sterns, or Fannie Mae or Freddie Mac, everybody is going to pitch in.

I say everybody because when Washington bails out a huge corporation, you have to understand that you and I and our children and our grandchildren are "Washington." Congress and the President don't have a big bank account they can write checks on to help major corporations. They spent all their money decades ago. Bail-out money comes from the American people, but our elected officials are the ones who get to decide who we are going to help.

Just like after 9/11, Washington will try and guilt-trip us into continuing our spending habits. The American consumer is the engine that keeps our economy going. So, you and I have to decide if we are going to continue on spending more than we have, or are we going to tighten that belt and try to drive down our debt load?

If we keep spending, corporations will get back into the black a whole lot sooner, but the rest of us will be falling farther and farther behind. The banks and credit card companies might loosen the purse strings so we can easily borrow more, but that will start the cycle all over again.

Maybe now is the time for the American consumer to get back on his or her feet and pay down their debt load. That will be hard on everyone in the short term, but in the long term, I believe it will make our country stronger.

Who knows? Maybe debt reduction will catch on in Washington, and we will stop sending billions over seas. We could take that money and pay what our country owes, giving or children and grandchildren a country fiscally strong.

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