All about Business and management

November 24, 2008

Is Mr. Paulson too late?

Filed under: My Opinion — Jagdish Hiray @ 9:40 pm
Tags: , , ,


            Yesterday first time I noticed US treasury secretary Mr. Paulson started talking about helping consumers and trouble homeowners. Do former CEO of Golman Sachs and supporter of so-called ‘free market’ economy know consumer is important element of economy? Consumer is building block of this economy. This is the consumer who promptly wakes up in the morning, works hard and feeds family. This consumer if ‘atom’ of this economy; this economy is built on millions of atoms ‘consumers’. Not all of these consumers have investment in stock market nor majority of them have 401K accounts. But this ‘consumer’ was ignored, focus was given to stock market and efforts were seen to secure foreign investment in stock market.


            Today ‘consumer’ is dead. Money stops flowing in ecosystem of this economy. You do not have to wait for report to come showing banks tighten lending policies, banks stopped lending to consumers… You need to be in mall, in wal-mart, in offices, in restaurants, at gas stations to see how consumer is suffering what is its pain. You need to pass by through towns to see forecloses happening in communities, you need to feel what you feel when you vacant your home with heavy heart …


            Too late to rescues … regulators were waited too long to watch economy get recovered, expecting consumer to suffer and stand again to keep life going. Yes, this time consumer will stand up again but with different vision and mission. New born consumer will stop using credit cards and unnecessary spending, will refuse to borrow money from financial institutes, will not invest in stock market to pay for huge CEOs compensation and fund manager’s expensive mortgages, will try to increase savings and refuse to gamble in stock market. Will be happy to get small amount of 401K returns with peace of mind.


            There is enough of free market and capitalism. Henceforth consumes will drive market not bankers and traders.




  1. Hey Jag, Good posting. I certainly will be interesting to see how this crisis plays out in regards to consumer credit. In my view, the media has focused on the failures in the banking and finance industry and with good reason. Much predatory lending occurred and on a faulty business model of ever increasing asset prices. But the consumer was also quite willing to bet on that faulty model with an amazing amount of new cars, new plasma tvs, etc purchased on borrowed money.

    I read an interesting book called “Affluenza” which talked about the degree to which modern consumers have become infected with the need to keep getting the latest of consumer items to be happy.

    WIth all the financial and credit pain around, I don’t see evidence that people have recognized the contribution that Affluenza has made to this entire mess.

    Comment by tony — December 2, 2008 @ 12:21 pm | Reply

  2. Thank you for your posting Tony, appreciate your comments.

    Current crisis is turning point for this century. This is going to change mind set of consumers in US society. Black Friday was recent example and this Christmas season will be another. One should buy Plasma TV and new cars only if you can afford and not as loan or debt you can not pay off.

    Concept of debt will slowly deminish in this society over couple of years and market will be driven by people and not multi nationals as happens in emerging markets. One of that example is Ford and GM making oil efficient cars …

    Thank you again for your posting and encouragement.


    Comment by Jagdish — December 2, 2008 @ 3:25 pm | Reply

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