Discretionary Spending Goes the Way of the Dodo BIrd

One of the great weaknesses of capitalism is that it relies on trust. The trust swings wildly from one side to the other. Two years ago it was blind trust to the point of utter foolishness. Now we are rapidly heading towards the other extreme where all trust disappears. When this happens saving rates move up and hoarding develops. This is occurring now and unchecked you get depression. What is good for the individual is not good for the whole. You saw this with banks, credit card companies, brokers, hedge funds, etc. etc. The government has been trying to stand in the gap restoring this trust but with little success (partly because of previous massive mistakes made by the government). It is now moving mainstream which is deadly dangerous. Article below talking about what MasterCard is saying about what they are seeing. Very scary.


http://www.reuters.com/article/ousiv/idUSTRE4A43TQ20081105

NEW YORK (Reuters) - U.S. consumers slashed spending in October, shunning purchases of items over $1,000, as a global financial crisis battered their savings accounts and their psyches, according to figures released on Wednesday by SpendingPulse, the retail data service of MasterCard Advisors.

"The numbers for October are very negative across the board," said Michael McNamara, vice president at MasterCard Advisors, of sales figures tracked by SpendingPulse.

"Any area that deals with consumer durables, especially areas like furniture, electronics and appliances ... that relies heavily on sales purchases that exceed $1,000 in value are under significant pressure," he said.