I will post weekly, but just in the last few days the web has begun to sprout a considerable volume of "post consumerism" rhetoric (748,000,000 Google Hits) so maybe we will have more to say more often.
Why is the capitalist/consumer economy destined to change from a consumer product based system? and what will the replacement system look like?
The simple answers are: WE HAVE LOTS LESS MONEY TO BUY STUFF WITH, as to what the economy might look like, that's the subject for future postings.
I revisited the George Carlin monologue on "stuff" and its more relevant today than it was 25 years ago. To get into the correct mood for the new "post stuff economy" its worth re watching the master in his prime on YouTube. George Carlin on Stuff http://www.youtube.com/watch?v=MvgN5gCuLac
Beyond the issue of massive price losses in 401K's and home equity for individuals, and beyond the falling consumer outlook numbers, and beyond the real un and underemployment rates of 16-20+%. Two things strike me as essential data that supports a fundamental change in how our economy will work in the near and mid term future.
1. The historical pricing for housing suggests that housing prices will return to the norm after dropping below the norm. (Many of you have seen this Case-Shiller Chart . Oh! gosh this chart is a little misstated. If you look at the ups and downs the pricing needs to fall way below the average before it seeks steady state. The graphic developer kind of tapered the final dotted line out at the norm. That's not how a pattern would be repeated. To repeat the pattern you need to see a significant drop below the norm before it spikes up again, so read it and weep or worse. I think the worst is yet to come).
My guess, at least another 40% DROP IN THE PRICE of a single family home price, which will mean a lot more foreclosures based on the following WSJ article. This will bear out if the banks push the mortgage rates to 10% or above to improve their interest spread positions. Monthly mortgage costs will have the effect of pushing the cost of the houses down. Exactly the opposite effect that we have seen over the last 15 years as mortgage rates fell housing prices rose.
- New Evidence on the Foreclosure Crisis by Stan Lieboiwtz.....What is really behind the mushrooming rate of mortgage foreclosures since 2007? The evidence from a huge national database containing millions of individual loans strongly suggests that the single most important factor is whether the homeowner has negative equity in a house -- that is, the balance of the mortgage is greater than the value of the house. This means that most government policies being discussed to remedy woes in the housing market are misdirected.....
From The Wall Street Journal http://online.wsj.com/article/SB124657539489189043.html
I have to admit that of the three homes I live in, I own two and the bank and I own one. The shared ownership one is upside down for both me and the bank, but I like it, and the mortgage is still bearable. I got one of the last pesky interest only ones based on LIBOR (which I knew was a lie in my favor) before the mortgage system collapse. However, that mortgage doesn't reset for four more years and we will be in the new "post consumer" world by then, and I can wait a little while to predict what that will mean to me. (See future posts)
2. The financial industry is squeezing credit and trying to increase the net interest spread between their cost of money and the price that they sell that money. In 2008 financial institutions have significantly cut consumer credit card limits. Financial instituions will continue to cut consumer credit limits., and raise interst rates.
Bloomberg.Com reported in March that credit card companies will cut $2 Trillion in consumer credit in the next eighteen months. http://www.bloomberg.com/apps/news?pid=20601087&sid=adCwmmkzFI3U
That's $2 Trillion less in "stuff' Americans and Europeans will be buying from around the world. If you adjust that for some cycling of funds, say 6 times a year or $12 TRILLION NOT SPENT on "stuff" in the consumer market.
What will this amount of spending be replaced with in the "post consumer" economy?
My guess we will have much smaller private consumer product buying and selling , and more public sector buying and selling. We might also see some of that "green energy" development for our investment of the money we will save by not buying "stuff".
The folks down the street won't be getting a swimming pool,. but they will be pushing City Hall to build one for the community.
We won't be buying new GMs Fords or Chrylsers, but pushing City Hall for more mass transit, or maybe keeping that clunker running a bit longer by using it less.
We won't be working overtime for more cash to buy stuff, but we will be pushing our employers (who are cutting wages and benefits) to cut back our work weeks or at least let some of us work at home or bundle our hours into fewer days of commuting.
We won't be buying more wasteful big plasma screen TV's and we won't be wasting more electricity in our homes, but we might by that "big ticket" photovoltaic system (PV) for our roof or wind turbine for our backyard. (I did.)
This is the first post and in future posts I will be covering things like.
Everything the bankers and economist's think they know about the recovery is wrong.
The definition of Potlach.
Who will be the new captains of industry in the post consumer economy?
The "Slow Money" movement.
Everything we do becomes local.
The resurgence of brands that don't change their look every time the wind blows.
Products for the "post consumer" economy.
Service industry for the "post consumer" economy .
Higher education in the "post consumer" economy.
Careers for the "post consumer" economy.
Living the good life in the "post consumer" economy (for some of us).
And anything that is suggested or comes up.