On a hypothetical basis, let's say that it is a mild crisis.

Overall mild...but there will be many families and businesses...even communities who will have worse.

Even in this mild scenario, a lot of consumers may wake up and realize they have to dramatically rethink the way they are spending money.

It is nice to look around many of our neighborhoods and see all the building going on...to drive around and see all the shiny new cars..to see the malls filled with needles garbage...fun garbage nonetheless.

Here is a list of things which even a mild scenario could put on the "maybe later honey" list.

Americans drive the world economy by taking debt....how will we rebuild these sectors of the economy when we cannot afford too?

What would happen if all three of the major auto companies sold only 30% of the usual number of new cars? At the same time that all those construction workers are told come spring that they don't have work?

Is it possible that y2k is not only a matter of panic and trust, but also a matter of going a little too far beyond our means?

MAJOR INVESTMENTS

New Automobile

New Home Construction or New Addition

Home Renovations

Foreign Vacation

New Furniture

New Home Entertainment and Stereo

New Kitchen Appliances

New Lawn Equipment

OTHER EXPENCES WHICH CAN BE CURTAILED

Weekend leisure activities

Dining out

New clothing

Magazine subscriptions

Charitable donations

Movie going, video rental, cable TV premium versions

New Books, CDs

Sport Club memberships

Babysitter and childcare

Long distance calling, second telephone line

-- Thom Gilligan (thomgill@eznet.net), September 16, 1999

Answers

Hi, Thom! You provided a good list!

And then there's all those "little things" that we take for granted, and think nothing of buying, but which still add up. I have a pen pal in Kamchatka, Russia, and after writing to her for a while, I suddenly realized how many "little things" I buy without thinking a second thought, but for many people in the world, these things are major expenses!

Things like: good vitamins envelopes and stamps monthly internet fees desert car insurance, tires, battery, gasoline FOR THE SECOND CAR prepared food (the kind that you can just open and eat, or stick in the oven or microwave) nice paper to write on zip lock bags, aluminum foil, waxed paper, plastic wrap nails, screws, liquid nails, and on and on....These are all simple things that we take for granted, but we may have to rethink next year. Or stock up on, now, while we still can.

Ah....so much to do, so little time and money!

Margo

-- Margo (margos@bigisland.com), September 16, 1999.

OOPS...sorry...I wrote a list, but the computer rearranged it, and left out the commas....and, by the way, it's "dessert", and "car insurance" not desert car insurance. ha!

Margo

-- Margo (margos@bigisland.com), September 17, 1999.

Margo,

Thanks for clarification! I went to check my policy to see if I was being overcharged/underbilled for all of my "desert cars". Who's your agent?

-- dessert in da desert (hotcars@summer.com), September 17, 1999.

I agree with all of the above, but first will go that 2nd car that isn't paid for, the boat and motocycle that isn't paid for, the furniture, especially that 45 inch TV and stero sound system that isn't paid for. So many many people, especially the younger ones, are so in debt and don't own what they have. And giving up all the little things, while they add up, are not going to make car and house paymts. I thank God that hubby and I were both raised with the idea that other than your first house, you pay cash. But it isn't just the young people who are in debt. Friends in 60s sold their home for $150k cash, put $40k on a $250K house (now worth about $185K) and blew the rest of it with a European cruise, new furniture, carpeting (they didn't like the color in the brandnew home) They are now $200 in debt (also bought a new Cadillac on time)and came close to loosing it all when he lost his job in a downsizing operation with Wells Fargo. Fortunately, for them, an Aunt died and this allowed them to pay off all debts except house. He is getting his retirement and paying $1500/month to ex wife and the house payment is $2000. So guess who is going to have to work until she drops dead??????? Grasshoppers come in all ages...fortunately, so do ants.

Taz... who has to get outside and watch the well drillers. They were at 90 ft when they left last night. We need about 150 to hit the aquafir. This ones for the deep well pitcher pump.

-- Taz (Tassie@aol.com), September 17, 1999.

There is an idea floating out there that if the IRS goes under the Federal Government will just shift to a sales tax to fund the Federal Government. So what are they going to tax? If there is massive unemployment most people will be hard pressed to pay for food and rent much less anything else.Most people will delay purchasing anything but the basics and if the Federal Government tries taxing food the people will riot.

-- Stanley Lucas (StanleyLucas@WebTv.net), September 17, 1999.

If your hypothesis is right (initially a 4, 5, or 6), and this causes many (or most) Americans to defer major purchases, the economy will take a big hit. Now we are at a 7. This will cause unemployment, which in turn will cause additional consumers to delay major purchases, and now we could be at an 8. If confidence doesn't pick up, and the problem is world-wide, we could easily be a 9.

I would be far more likely to estimate the outcome as an 8-9...

You ask: Are we currently living beyond our means? In many cases, yes. That would be rectified if there is a sharp downturn.

-- Mad Monk (madmonk@hawaiian.net), September 17, 1999.

Ok Thom et all... a few more things to give up:

Diet soda in place of water 6-8 times a day.

Extravagant toiletries

Green's fees

Hardcover books

NFL tickets

Indian casino gambling

Beauty shop haiarcuts, perms, coloring, fake nails, eyebrow waxing

$ 3.50 Birthday cards

two ply toilet paper

Drink after work 3X a week

Braces for a prettier smile

Office pools

More software

Time to get off the pot and cut back NOW. Frankie

-- Frankie Smak (Fransmak@prodigy.net), September 17, 1999.

Does anyone have data on the extent of car leasing today?

If we experience an economic downturn and a lot of two-job, two-car families become one-job, one-car families, then a lot of cars currently being leased will be turned in (esp. if the downturn is accompanied by a marked rise in gas prices). Also, if there are business bankruptcies then all the cars curently leased by the companies would also be turned in.

If that happens then the used car market would be flooded by lots of late model used cars and prices would drop.

-- dhg (dhgold@pacbell.net), September 18, 1999.

So what you're saying is "If you are planning on buying a new car, wait a year and get it at a rock bottom price."

Gerald

-- Gerald R. Cox (grcox@internetwork.net), September 19, 1999.

Don't most new cars have several embedded chips?

-- Margo (margos@bigisland.com), September 19, 1999.

Thanks to Frankie for extending the list.

And the list could go on. Stop and think. Almost all of what Americans spend their money on is not really essential to survive...it is a consumerism based on ego satisfaction...which well all love and would miss.

But, if you have a job providing people with something which is not related to heat, food, very basic medicine, sanitation how long will it be before your company cannot afford to pay you. If you own the business, how long before you lay people off?

Even before the y2k issue, I could see that car leases were a disaster waiting to happen. The amazing thing about leasing was that you could trade in a car you were paying $500 per month for and drive out with a newer, more luxurious car for $300 per month. In the days when most cars were purchased, they said that just signing the papers and driving the car home made it loose 20% value overnight. Now, a car which has been leased for 1 year can be returned and the leasing company can lease it again with a book value greater than 80%. Also the leasing company can write the depreciation off as a business expense.

There will probably be some type of federal emergency law signed to protect homeowners who are unable to pay mortgages during 2000. There may be a law which protects householders, allowing them to retain possession of one car, even if it is a leased car they are not able to make payments on.

Yes, getting a car at rock bottom prices may be quite possible. My advice, avoid the big name cars like Mercedes, BMW etc. They will only draw attention when your neighbors notice that you got one. Better to get a middle of the road car. Buy an identical one to park in your garage...maybe spare parts will get short for a while.

-- Thom Gilligan (thomgill@eznet.net), September 20, 1999.

Other things that will see reduced demand:

pet therapists

new computer add-ons & upgrades for the home

$150 tennis shoes

trips to Disneyland

designer clothes

expensive engagement rings

expensive weddings

expensive wedding gifts

expensive honeymoons

private college tuition

private grade school tuition

fur coats

Starbucks & other overpriced coffee shops

purebred pets

high-priced "investment" artwork

all the trappings that go with prom night, including limos, hotels, fancy clothes, etc.

alligator shoes and purses

cosmetic dental work

plastic surgery, including breast enlargements

tennis lessons

country clubs

chocolate candygrams and roses by the dozen

*Sigh* That's enough, this is getting depressing . . .

-- waiting (waitingforthe@x2.fall), September 20, 1999.