We (the U.S. consumer) Have Not Learned Our Lesson

Bret Fisher — Tue, 08 Dec 2009 03:37:35 +0000

Just one year from a stock market crash and real estate burst that “we thought” forced us to re-learn the lesson our grandparents knew about leverage: Use it to buy assets, not liabilities. Don’t use it to buy merchandise that doesn’t make you money. I’ve closely followed Macy’s (M) for years, but I guess I missed the part about just how much of their quarterly sales are done with store credit cards! WSJ claims it’s over 50% last quarter (3Q 2009). I’d love to see a graph on this stat (% of sales on store credit) over the last 10 years. Do we really have a 6-month memory about how we spent ourselves into so much debt?

I could go on all night about how maybe we never learned the lesson; about how this could be caused by an over-reactive government that won’t let people and business fail en masse, in order to teach our society a lesson we need to re-learn,.. but I won’t for now.

It’s interesting that the article I read this in wasn’t really about the still shockingly high amount of Macy’s shoppers that are buying on store credit (all this during non-holiday months). As an American, I say YES to this federal proposal that you must prove you can pay before you borrow for clothing, furniture, and electronics.

And on that point, why can I get a retail store card without proof of income but there is no store credit at the grocery store?

(photo credit to stevendepolo under CC BY 2.0)

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We (the U.S. consumer) Have Not Learned Our Lesson