Wikinvest Wire

It's about needing gas money

Wednesday, April 30, 2008

The sad stories of Americans squeezed by rising consumer prices, tighter lending standards, and falling home prices are beginning to saturate the mainstream media.

This report from the Associated Press is pretty typical, though the smiles on the faces of the couple below is rather odd - maybe they don't yet realize that they'll be lucky to get ten cents on the dollar for that pile of junk in front of them:

Struggling with mounting debt and rising prices, faced with the toughest economic times since the early 1990s, Americans are selling prized possessions online and at flea markets at alarming rates.

To meet higher gas, food and prescription drug bills, they are selling off grandmother's dishes and their own belongings. Some of the household purging has been extremely painful — families forced to part with heirlooms.
"This is not about downsizing. It's about needing gas money," said Nancy Baughman, founder of eBizAuctions, an online auction service she runs out of her garage in Raleigh, N.C. One former affluent customer is now unemployed and had to unload Hermes leather jackets and Versace jeans and silk shirts.
Earlier this decade, people tapped their inflated home equity and credit cards to fuel a buying binge. Now, slumping home values and a credit crisis have sapped sources of cash.

Meanwhile, soaring gas and food prices haven't kept pace with meager wage growth. Gas prices have already hit $4 per gallon in some places, and that could become more widespread this summer. The weakening job market is another big worry.
By the millions, once-proud and once-spendthrift consumers are now looking in the mirror and saying to themselves, "What was I thinking? I lived through the biggest asset bubble in history, buying all sorts of useless junk I don't need, and now all I have to show for it is a big pile of debt."

Well, until it sells, they still have all the useless junk.

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baddriver said...

"One former affluent customer is now unemployed"

They were never affluent, they just lived an affluent lifestyle well beyond their means. A true wealthy person lives below their means and has enough in savings to ride them through periods of unemployment.

Anonymous said...

I think the couple pictured owns the auction site (seriously). If I owned an auction site, pawn shop, consumer debt counseling firm, or a law firm specializing in bankruptcy filings, I'd be smiling, too!

By the way, I got some moderately useful junk on eBay last night without having to fight for it, which is darned unusual.

I also collect coins, and have, for about a year, seen auction prices for "mid-grade" coins (VF, XF, AU) collapse even while the high end (MS-65+) has soared. To me, it looks like the very rich were still spending thousands on rare coins, but the average Joe collector is selling, not buying.

- Pete

Tim said...

Good point - the mini-caption just says the two "display items that they will be selling on ... " and then if you click on the photo to get the full caption it reveals them to be the auction site owners. It still could be some of their junk, but the smiles certainly makes more sense now...

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