Will consumers or savers rescue us?

[GREENBACK]

I know that for quite a few years now our economy has been driven on consumerism and easy credit. I believe this will dramatically change as we dig our way out of the current financial mess we're in.

For a while now we've heard about the horrible saving habits of most americans but yet the economy was in great shape according to the experts. People bought lots of stuff and charged it without a second thought. I guess this made everything look good on paper. People were spending but I think it was only promised money (credit cards).

I have always been a saver when I could afford to be but apparently most people haven't been. It looks like when our economy recovers (whenever that will be) there will be a lot more people saving ( I would think) than there was before this whole downfall began. So, my question is will all these savers be good for the economy? Are we still going to need those consumers to keep foolishly spending every penney they have? Will savers somehow create a whole new economic enviorment that isn't dependant on big spenders?

It seems like those that are trying to fix the economy are trying to basically rekindle the flames of consumerism.

[jIM_Ohio]

Originally Posted by GREENBACK

I know that for quite a few years now our economy has been driven on consumerism and easy credit. I believe this will dramatically change as we dig our way out of the current financial mess we're in.

For a while now we've heard about the horrible saving habits of most americans but yet the economy was in great shape according to the experts. People bought lots of stuff and charged it without a second thought. I guess this made everything look good on paper. People were spending but I think it was only promised money (credit cards).

I have always been a saver when I could afford to be but apparently most people haven't been. It looks like when our economy recovers (whenever that will be) there will be a lot more people saving ( I would think) than there was before this whole downfall began. So, my question is will all these savers be good for the economy? Are we still going to need those consumers to keep foolishly spending every penney they have? Will savers somehow create a whole new economic enviorment that isn't dependant on big spenders?

It seems like those that are trying to fix the economy are trying to basically rekindle the flames of consumerism.

Consumers do drive the economy. Recoveries are tough to predict as to how they happen or what drives them.

We know employment fixes things- so anything the gov't can do to keep people working generally is a good thing.

I do take exception to the comment I have outlined in green. Greenspan in his last year made several comments that it was obvious people tapping into home equity was driving a significant amount of the spending. He did not flag this as an issue, but whatever numbers he had access to, and the fed discussed, clearly showed the credit bubble forming at its mid stages.

[GREENBACK]

I remember those comments but we heardly plenty of statements that the "fundamentals of the economy were sound" from the powers that be. I guess that was partially true but it was not hard to see that we were playing with phantom money.