Even the rich are not spending anymore - The Daily Reckoning
The Daily Reckoning by Bill Bonner
On This Day - 20 July 2010
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Vancouver, Canada

No time to write today. We're getting on a plane for Vancouver...and experiencing technical difficulties.

Back in the '50s, TV screens would frequently go into test pattern mode. An announcement would come on saying the station was 'experiencing technical difficulties.' We were surprised. It seemed like a miracle that the 'idiot box' would work at all.

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Dow up 56 yesterday. Gold down $6.

Deflation stalks markets and economies. Don't believe us? Just look at the 10-year T note. It's about the only thing that is going up. It means people want safety, safety and more safety.

Of course, they will find little safety in T-debt. But that's a long story...and it's what makes markets so entertaining.

This note from the New York Times...and then we're signing off.
If the rich won't spend, who will?

"The economic recovery has been helped in large part by the spending of the most affluent. Now, even the rich appear to be tightening their belts.

"Late last year, the highest-income households started spending more confidently, while other consumers held back. But their confidence has since ebbed, according to retail sales reports and some economic analysis.

"One of the reasons that the recovery has lost momentum is that high-end consumers have become more jittery and more cautious," said Mark Zandi, chief economist for Moody's Analytics.

"Though stock performance has a bigger psychological and financial impact on high-income households, consumers of all income levels are fretting more about their financial future, perhaps bracing for the possibility of another economic contraction. Consumer confidence slumped in July to its lowest point since August 2009 in the Thomson Reuters/University of Michigan index released on Friday.

"Even Federal Reserve policy makers have acknowledged that the recovery is losing steam and suggested that should conditions worsen further, additional stimulus may be needed, according to minutes of their last meeting, released on Wednesday.

"But the Top 5 percent in income earners - those households earning $210,000 or more - account for about one-third of consumer outlays, including spending on goods and services, interest payments on consumer debt and cash gifts, according to an analysis of Federal Reserve data by Moody's Analytics. That means the purchasing decisions of the rich have an outsize effect on economic data. According to Gallup, spending by upper-income consumers - defined as those earning $90,000 or more - surged to an average of $145 a day in May, up 33 percent from a year earlier.

"Then in June, that daily average slid to $119. "I think a lot of that feeling that the worst was over has sort of abated," said Dennis J. Jacobe, Gallup's chief economist."


*** And here's an interesting item that is going around the internet:

Ever Had A Job ?

A chart that showed past presidents and the percentage of each president's cabinet appointees who had previously worked in the private sector - you know, a real life business, not a government job? Remember what that is? A private business?

*Roosevelt - 38%*
*Taft - 40%*
*Wilson - 52%*
*Harding - 49%*
*Coolidge - 48%*
*Hoover - 42%*
*FDR - 50%*
*Truman - 50%*
*Eisenhower - 57%*
*Kennedy - 30%*
*LBJ - 47%*
*Nixon - 53%*
*Ford - 42%*
*Carter - 32%*
*Reagan - 56%*
*GHWB - 51%*
* Clinton - 39%*
*GWB - 55%

*And the Chicken Dinner Winner is.........................*

*Obama - 8%* ----

This is the guy who wants to tell YOU how to run YOUR life !

ONLY ONE IN TWELVE in the Obama Cabinet HAS EVER HAD A JOB.

*YEP, EIGHT PERCENT!

And these are the guys holding a "job summit"; going to tell us how to run our businesses, make our decisions for us? Do you want to trust them with every aspect of your life?

Bill Bonner is the President & Founder of Agora Inc, an international publisher of financial and special interest books and newsletters.

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