Sunday, February 3, 2008

Feed The Pig!

There is an interesting, refreshing irony that I have noticed amidst all the recent economic doom-and-gloom news cascading around us, especially here in the US.
President Bush and the US Congress are all set to pass a $140-150 bn stimulus package wherein most legal residents would get a tax rebate check ranging from $600-$1200 sometime by the middle of this year, depending on their status etc. The stimulus part of the package depends on the recipients of this rebate check deciding to spend most of that money rather than bank it, thus providing a boost to the overall economy. Consumer spending is seen as a bulwark supporting the American GDP and has so far prevented a major recession from happening, so the explanation goes.
While this is going on, and merits of the package are being debated, i have recently noticed some well-meaning, tongue-in-cheek ads on the broadcast and cable tv networks sponsored by The American Institute of Certified Public Accountants basically running on the theme of Feed The Pig, that call on consumers to rein in their spending and instead delay their purchases and literally save their dollars in a piggy bank. Historically, the personal savings rate in the US has been low, much lower compared to some of the emerging Asian countries, and US consumers have been that much more dependent on credit to finance their purchases. Part of the current economic malaise, with symptoms showing up in the subprime crisis and mortgage foreclosures, is due to the inability of consumers to have a financial safety cushion as they have been overextended on almost everything related to credit card debt, mortgage loans, living expenses etc. So, the advice on Feed The Pig is, in my opinion, timely and sincere.

Now, if people do heed that advice and feed their piggy banks, Bush's economic stimulus package will surely fall flat. Not that too many people are confident it will work in any case!