Mark Cuban's generally spot-on with his thoughts on leadership, market economics, and many other topics. But this time, I think he's off-base:
In this post, he suggests that we should also bail out people's credit card debt. I don't agree.
I do believe that the Feds should step in to help with the foreclosure problem, though don't agree with their approach - here's what I think should have happened.
But, helping reduce basic, simple consumer debt doesn't make sense. I still get 2-3 offers/week for credit cards from various lenders. They're not hesitating to lend these dollars. Consumers are still amazingly ...dumb about their persistence in getting into credit-card debt. You've written about this.
What does make for a great consumer stimulus? Positioning and marketing.
In their haste to get Congress to act, the Fed, Treasury and White House went on a massive campaign to tell the world how bad things are, how dire the situation is if not addressed immediately, and how quickly we're going to go into a massive depression if Congress doesn't immediately do what they want.
Congress acted. But the Fed/Treasury/White House kept up the fear message, saying it's much worse than they thought and will take much longer to fix than they anticipated.
Why would anyone want to go out and spend given this?
Reducing credit card liability might give people a chance to breath a sigh of relief, but it's not going to get them to spend more.
To do that, the three Amigos above + the candidates + Wall Street + others need to start talking about the fundamentals of the American and global economy, and that they remain strong; they will need to assure consumers that debt will be available soon, and that the market is starting to bottom out, and there are some amazing bargains (both on Wall Street and in the neighborhood mall) to be had, and that the iron is hot - strike now!
It's a perception game.
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