Last year in october the American stock market shed about 30-35% of its value over a short period of time, before the major economist woke up we saw a free fall of the prestigious Dow Jon’s industrial average. Some blamed the sub prime mortgages others blamed the slumping economy and the price of gasoline for this catastrophic situation.
This might be true in a sense but let me put forth a totally different scenario before you guys, I think most of you are aware of a disorder called ADD (Attention Deficit Disorder) where a person suffers from a short attention span and is unable to plan ahead or finish up what he has started, in the same way most of the Americans behave when it come to shinny objects that they can flaunt around for e.g. when the new I-phones came out people waited in the lines outside an apple store to get one, 6 months later when the new Black Berry’s came in the market the same people were seen standing in front of the store that sold the new gadgets.
When a person in India or a third world country buys a house he meticulously plans his expenses around the mortgage. In short plans his whole life around so that he can make those monthly payments that he owes to the bank contrary to this when an American buys a house he even takes a loan on the minimum deposit that is required to secure the house and consequently lives beyond his means.
This is what happens when you become a spender’s economy, the trade deficit to other countries is at an all time high and you feel yourself stuck in a spiral downturn. The only way a country can lift itself up from this economic spiral is to embrace the principal that has prevailed for generations “Planning ahead”.
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