Comment of the Week
ADOTAS — Highlighting a comment from the week. (Yeah, I know it’s only Tuesday, but it’s a short week anyway)
From GVP
“@common sense
It’s kind of a mixed bag here. On a macro scale, capital needs to flow, but part of that flow needs to be saved along the way.
Imagine a world where everybody spent every penny they earned with no regard for “rainy days”. Imagine if your boss was two paychecks away from ruin, like the average American is today. Rather than keeping your next month’s payroll in the bank, your boss runs off and hires more people under the assumption that he’ll have enough money in the bank come next month.
It’s pretty obvious that this world would collapse shortly as something would go wrong.
But the inverse isn’t any better. Imagine a world where everyone saves 25%+ of their income. Now imagine being a lender in this world. Imagine not being able to get any interest from the bank because the bank can’t lend your money to anyone else. And why would they need to? Everyone else is saving 25% of their income, so we all have money in the bank. And if someone actually did want a loan how much interest would you get anyways? With so many people competing for loans, the rates you earn would be low.
Obviously this world has its issues too (see modern-day China). It’s pretty clear that a world with zero debt would be a little crazy.
So let’s look at the numbers. The US economy has had a negative personal savings rate for the last couple of years (though it may have reversed this year). The US government has been running a deficit for a decade with a ballooning debt load.
The US economy has a heavy case of “spend every penny”. Lots of people “printed” money by making promises they couldn’t keep: CDSes, Mortgage-backed securities (on over-promised home value with balloon mortgages), failing corporate bonds (Lehman Bros), failing insurance (AIG), the collapse of “commercial paper”.
At many levels, the problems companies face right now comes down to a lack of cash. GM, when talking about the desire for a bailout, is talking about having 3 months of cash left for payroll. The reason for the $700B bailout was to provide cash flow to these institutions that simply didn’t have enough available.
I know it sounds “un-American” to save money, but Uriah has it right here. Yes, companies want you to spend money, but what the economy really needs is a positive personal savings rates.
For the average person, that means throwing a little extra money in “the markets”.”
Reader Comments.
No comments yet
Leave a Comment
Article Sponsor
More News
-
Loading ...
Latest News
- Funding in Brief: $10M for Spongecell, $8M for Prolexic February 9th 2012 ADOTAS – Rich media ad company Spongecell has raised $10 million [...] more »
- Google AdMob Axes Minimum Bids, Targeting Fees February 9th 2012 ADOTAS - As of Feb. 15, Google will change its [...] more »
- Infographic: HootSuite Analyses Social Media Impact of Super Bowl Ads February 7th 2012 ADOTAS - So, it’s the Tuesday after the Super Bowl, [...] more »
- Facebook to Serve Mobile Ads in Coming Weeks February 6th 2012 ADOTAS – According to a Financial Times report, Facebook will [...] more »
- Survey: 39 Percent of Mobile Users Responded to Super Bowl Ads Via Mobile February 6th 2012 ADOTAS - During the Super Bowl yesterday, mobile ad network [...] more »
- Sponsormob Leads the Way Into RTB for Mobile February 3rd 2012 ADOTAS – For more than half a decade, Berlin-based tech [...] more »
- Weird Study: Mobile Purchasing While in the Bathroom on the Rise February 3rd 2012 DM CONFIDENTIAL - According to 11mark, three-quarters of Americans with mobile [...] more »
Features
- Attribution Online: Introducers and Influencers and Closers… Oh My! February 9th 2012
- With gTLDs, Global Branding Starts with a Name February 9th 2012
- Rethinking the Online Advertising Ecosystem, Part One: Independent Publishers February 8th 2012
- Case Study: Social Ad Effectiveness February 8th 2012
- Video: “Build an SEO Foundation” Excerpt February 8th 2012
Spotlight
Sponsormob Leads the Way Into RTB for MobileADOTAS – For more than half a decade, Berlin-based tech firm Sponsormob has remained relevant in an industry characterized by [...] more...
Reader Favorites
Classifieds
- PS Technical Writer - SEO Data Analyst
- Interactive Project Manager
- Media Buyer
- PHP Software Engineer (Facebook Platform/Social AP
- SEO/Marketing Internship at Green Education Startu
Recent Comments
- With gTLDs, Global Branding Starts with a Name – ADOTAS | ShopComs.com: [...] With gTLDs, Global Branding Starts with a NameADOTASADOTAS – It's no longer important how
- Domain Outlook : Latest Domain News » Blog Archive » With gTLDs, Global Branding Starts with a Name - ADOTAS: [...] With gTLDs, Global Branding Starts with a NameADOTASADOTAS – It's no longer important how
- With gTLDs, Global Branding Starts with a Name: [...] and Microsoft have little to worry about over names like UnitedThis and UnitedThat. The
- ReTargeter » Attacking Bad Banners: Inaugural Edition: [...] between 0.01% to 0.1%. Even with retargeted ads, which tend to have clickthrough rates
