"This is the end of the consumer-based economy," said Peter Schiff, who runs the investment firm Euro Pacific Capital Inc. in Darien, Conn. "Americans have been buying too much stuff, and now the epic shopping spree is over. It is a permanent change."Wow. That's a dire prediction. Which explains, perhaps, the shift in the bailout plan that Paulson announced yesterday.
For years, consumers tapped into inflated home equity and use credit cards to finance their spending. Now those spigots are being shut off, and job losses are mounting.What had been a Wall Street meltdown is now, a few weeks later, being seen in a different light - we are at risk of massive economic collapse.
The recent data has been startling: For the third quarter, consumer spending fell 3.1 percent, the worst performance in 28 years. Sales at established stores for October were the worst since at least 1969. The slump is continuing into November: Macy's says it expects a decline of at least 10 percent this month.As we head into a recession which promises to be deeper than any we've experienced, wouldn't it be nice to have a seasoned old pro at the helm of the country - someone with the perspective of years, and someone who knows who to get on the phone to pull the right levers?
Even when home prices recover and credit becomes more available, Hoyt notes, Americans will have learned something: "They can't count on asset appreciation to meet their long-term goals."As we head into a devastating downturn, wouldn't it be nice to not have Democrats in power - the party whose policies led us into this mess?