24 November 2009

Underground Economy, Part III

Thanks again to Janine Mendes-Franco for selecting another Jenius post to appear on Global Voices Online. 

This won't take long...

Add the long tail of a 3-year recession/depression, with an economy tanking like Andre Agassi on crystal meth, with the government finally "forcing" the economic move that was two decades overdue--the firing of government pinheaded parasites--and toss in the repeal of the idiotic Closing Law now letting loose the forces of "shop 'til you drop" mania and what do you get?

Underground economy, Part III.

Part I was the basic "a little cash on the side and off the books" that kept Us slightly above water for decades.

Part II was the rocket-blast impulse to perfect the underground economy due to the new 7% sales tax, which as I predicted, ended up having an impact closer to 13-14% on the consumer and fell far short of projected revenue for the government. Note the widespread increase in "flea markets" and home-based businesses and a perceived increase in online shopping.

Part III will take the online aspect even further, but not as a tidal wave rush to embrace Internet technology, but as a way to bypass local stores for goods. Expect an increase in visits to websites such as Clasificados Online (the most-visited website in Puerto Rico) and a greater number of "barter" systems based on pooling resources. Facebook would be the venue for that movement.

Why? Uncertainty clashes with the seasonal consumer hunger to buybuybuy in order to feel "the Christmas spirit." A culture that views savings as money badly in need of spending is not going to let the vague spectre of a worsening economy make him or her back down from the Prozac-like relief that spending money brings them. So they will buybuybuy...

...But slightly smarter than before. More cash, less credit. More Internet searching, less mall crawling. More flea market and "I know a guy" than Sears-K-mart and "There's a sale!" More options that involve less money changing hands, preferably where the sales tax does not apply.

As the (smart) economists say, the recession is the recovery, but We don't see it that way. Our way is to buy Our way out of a bad cycle. Too bad We aren't fixing the bad cycle: We're just adapting better to it.

The Jenius Has Spoken.

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