Consumer whores that are Americans

When it comes to spending money on futile consumption, borrowing to spend money on futile consumption, or just spending money for the psychological fun of it, Americans are unparalleled. No other nation epitomizes wasteful or unnecessary spending like the Great States of America. When it comes to consipicuous or the other forms of it, Americans are the Jenna Jameson of consumption: ever-ready, eager and more than glad to do it. And so when people converse with me on the recent recession facing the country, it is absolutely amazing that most of them still ponder as to what could be the underlying cause? People will blame the developing economies like China for its undervalued currency, or the big corporate financial institutions that blew the bubble of credit into the people's ears, and to some degree, that is justifiable. But americans are oblivious to their downright pathetic practice of, or the lack there of, saving money.

The fact that the household savings rate in the US was no more than 1-2% for much of the 2000's is egregious; the savings rate actually went NEGATIVE for 2005-06 according to the OECD !! That means that in effect, americans were spending more than they earned all together. The proverbial American dream of owning a suburban house and car was so forecefully and effectively fed to the residents that they themselves began to partake in the imminent and inevitable financial/credit bubble. The people became confident as the property rates kept rising and forgot the old wisdom of equal and opposite Newton's action & reaction. The debt to income ratio in 07 for US stood at 130%, so they were overspending 1/3 more than was theoretically possible, thanks to the pre-approved creadit card, pre-adjusted APR's, and thus the pre-determined sh*thole that now peacefully exists over the vast land.

By comparison, savings in emerging economies actually surger during the financial boom of 2003-07 of India and China, to many economists surprise. In India, the savings rate for the 2000's was 30% of the household income, whereas in China it was a whopping 40%. It was this saved up money that actually cushioned the worldwide recession so comfortable in these two countries, GDP where for 2009 was around 9% for China and 6% for India, a farcry from the negative numbers of OECD countries. This financial prudence and providence is a remarkable and very important aspect of Asian culture; saving up money for future is a signature of both these countries, and that they also hold around 30% of the world's human population is no coincidence. Just as in the animal world, when there is fierce and relentless competition as such, everyone learns and feels a need to save resources for future. In India, parents save up for their kids education, marriage, houses, grandkids, who then in turn start the cycle again. Financial planning and frugality are the hallmark of Indians everywhere. But in America, as soon as the kid turns 18, just as a bird's chick learning to fly ahead of its time by frefalling from a tree, they leave the parents house to go "grab life by its horns". Even the parents are no less eager to shit the kid out of the house so they can finally spend on themselves. The kids might not know a collateral from a forbearance, but they sure do know the size of rims to get on their cars and size of the stud to get their tongue pierced. Everything from a victorian house to a brand new chevy to a HD tv to a macbook: it can be yours for one low payment! how pathetically convenient. Along with learning to cook curry and the academic prowess, I have also inherited financial management in my Indian heritage (not the frugality though, I am very much a consumer whore to some degree). I opened up my savings account at the age of 18, have two mutual fund investments in India along with a monthly fixed deposit scheme giving me a 8% compounded return, and bought a handful of gold before that bubble started blowing.....So when I see worn down faces of the recently unemployed hobos in the States, or the sad look on the teenager returning the PS 3 he bought for no money down, or the people locked out of their own 5 bedroom victorian houses with granite modular kitchen,I laugh, hysterically......
Americans once spent so liberally they would have charged off even life itself to a no money down, low interest, pre-offered platinum card, and now as they look outwards and inwards for a line/life of credit, they must finally come to a sincere and firm realization that what they want is not what they need; instead of looking towards the west for fun and frolic, its time for them to turn their heads and thoughts east for some prudence and providence.