Tuesday, December 22, 2009

What Happens When the Demand to Hold Cash Is High

Irwin Kellner has a nice piece on the current desire for buyers to haggle and wait out for bargains. He doesn't call it such, but it is really a high demand to hold cash. Here's Kellner:
Nowadays, if you want to make a sale, you have to make a deal.

To succeed in today's economy it pays to remember one thing: Virtually no one pays list price any more for just about anything -- goods or services.

It is not hard to figure out why this is so. The past recession was so bad it wiped out trillions of dollars in wealth, billions in profits and millions of jobs.

Whether they are consumers, business people, investors, home buyers and sellers or even students, everyone is looking for the best price they can get. To make matters even more interesting, many of those who are still employed have been asked to take pay cuts as a condition of holding onto their jobs.

You can imagine what kind of mood this has put people into when they hit the malls.

This year's holiday shopping season is a case in point. Actual units sold for the most part were up a tad from last year's recession lows, but dollar sales barely kept pace with 2008 because of widespread discounting off list...

Don't like your phone or Internet bill? Call your friendly representative who will be happy to shave some dollars off the price -- especially if you threaten to take your business elsewhere.
Holding a company meeting or golf outing? What about a wedding, bar mitzvah, birthday party or any other affair? The answer to all is the same: Bargain -- you'll be surprised how much you can save.
Some might call this urge to deal the arrival of a bazaar mentality -- a situation where everything is negotiable. Me, I would call it a byproduct of more supply than demand -- not to mention plain old competition.

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