Obesity Not Just an American Dietary Epidemic
The American appetite is astounding. China has 1.3 billion to our 300 million people but we probably still outweigh them. Sorry, we have offended some of you. It’s inevitable. You can’t speak your mind without offending someone these days.
But truly, if consuming were people, we’d be China (to paraphrase a favorite movie). We the authors do not exclude ourselves. Take a look around you. The federal budget deficit. The lowest household savings rate (negative, by the way) since 1933. That was the year FDR initiated the New Deal – a good thing then when America was starving but which, ironically, led to many of the excesses we see today in the federal budget and that will lead inexorably to another Depression unless we change course. How much food they serve you on one plate at just about any restaurant chain in America. Wow. I’d like one order of spare ribs deluxe with eight plates, please. Christmas shopping at Wal-Mart. Our toy-filled garages. Our slag-filled basements. Yes, Americans love to consume. We’re amazing at it.
So why are we ranting and raving about this? Get off it, you say. Well, we’re in the business of advising people on matters related to real estate and investing. We owe it to our clients to share our insights related to these subjects so they can make educated decisions on their own.
We are alarmed by the lack of moderation in today’s financial markets, in America’s federal and state budgets, and in household spending. “Americans seem to have the feeling that it is wimpish to save,” said David Wyss, chief economist at Standard & Poor’s in New York. What might seem contradictory is that we often advise our clients to leverage themselves – to spend. Sound conflicting? When viewed properly, not at all.
We regularly speak of three financial profiles: spenders, savers and investors. Another hierarchy breaks us down as consumers and creators. While evidently not everyone in America saves, everyone certainly spends. The relevant question is: what do we spend our money on? Are we spending to consume or to create? From this perspective, leverage can be a powerful ally or enemy – an ally if we’re using it to invest in activities or things that generate positive returns (education, research, innovation) but a financial enemy if we’re leveraging ourselves to produce spectacular consumptive losses (spinner rims, Costco food portions, most wars).
But, as any small business owner will tell you, it is not enough to spend wisely. There has to be a cushion. In short, we have to save – not everything, but something. We have to be prepared for sudden, unexpected financial hardship. Even the most well-managed households, companies and countries can suffer from improper cash flows. Balance sheets and income statements only tell half the story. As it has been said, timing is everything.
We minimize the risk of catastrophic failure through discipline and moderation. Allowing ourselves to become obese financially – not wealthy, mind you, rather poor – results from poor diversification (moderation) and over-indulgent spending of our scarce resources. People who spend are not rich. People who save are not poor. Appearances are invariably deceiving. Whether spending, saving or investing – think first if you are creating or merely consuming.
The Payne Smoot Group is Utah’s premier real estate, wealth and property management firm. For more information on the Group’s holding companies, investment or employment opportunities, please contact (801) 717-7777 or info@paynesmoot.com.
