Lets say you cut out the "cat food, beer, spa memberships, high speed internet, 120 channel cable, entertainment, restaurants, multiple cars, and summer cottages." What would happen?

Lets just take one example...and lets make it spa memberships because that may seem on the more excessive side. Everyone stops going to spas.

1) Everyone at the spa loses their job--unemployment goes up.

2) All the support industries lose major clients (e.g., hair salon suppliers, plumbers, electricians, food suppliers). These industries are forced to lay people off because they can no longer afford them--unemployment goes up.

3) If the spa is privately owned, the owner goes bankrupt. Or, the corporation which owns the spa has dramatic losses on their balance sheet. Management is let go, and cuts in spending are initiated across the company in other divisions...in an economy such as this spending cuts routinely include layoffs--unemployment goes up.

And, as unemployment goes up, spending goes down (people don't have the jobs to earn the income to buy goods) and the cycle spirals horribly downward.

I could go on and on, but this scenerio plays out with any of the examples you posted. Like it or not, our economy is fundamentally based on the consumption of goods and services. Stop that consumption then the exact things you are bemoaning (i.e., "friends, relatives and neighbors losing their jobs, health insurance, and homes") accelerates across the board.

In fact, this is the reasoning behind the government's decision to increase spending (stimulus, bailouts). If the populace is no longer spending due to a recession, then the govt. (which is really the only entity large enough to affect the entire economy) should increase its spending so that the negative effects of the recession will not be as crippling and severe.

Be Good,

ronin
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