Splurging on Luxury Items Up - The Forgotten Lesson

Was reading The Business Times today (14 Nov 07) and an article caught my eye. The article "Splurging on luxury items up 29% in Q2" (source http://www.businesstimes.com.sg/sub/news/story/0,4574,256422,00.html) goes to reflect consumer's confidence in the economy. I ponder over that confidence. Still water runs deep, and peace before the storm, rings in my head.

The Business Times article stated
1) "Sales of luxury timepieces, jewellery and designer fashion items, as well as takings at fine dining establishments, were 29 per cent higher in the second quarter of 2007". Does luxury timepieces, jewellery and designer fashion appreciate in value that one can pawn away for money during bad times?

2) Apart from tourist spending on luxury items, the locals accounted for 64 per cent of luxury watch sales, 71 per cent of high-end jewellery sales, 72 per cent of designer fashion sales and 74 per cent of fine dining billings

In the last 1-2 years, we have seen a lot more luxury cars (e.g. Lamborghini, Ferrari, high end Merc, 7-series BMW, etc) on the road. While businessmen are making more money, the average are taking extra month(s) of bonus. With the little extras the average gotten, their spending increased tremendously. Spending has gone up, cost of goods have gone up too (due to recent inflation). That largely means, as they make more, they spend even more and save even lesser.

I am not suggesting that, the economy will collapse or turn into a recession in the next few months or a year. I just wonder, has people not learnt from the Asian Crisis and two other impact that brought our economy near its knees.

I recall reading in Robert Kiyosaki's book, Cashflow Quadrant, that suggested people will quickly forget painful lessons learnt when times are good and start spending again. This seems to be a childhood story of the hardworking ants and lazy grasshopper.

While some are happily spending and pampering themselves now, I shall look closely at growing my money and spending it later. Another thing came to mind, spending later, when the economy isn't doing as well, means, I won't have to pay the premium like everybody is paying now (Demand and Supply).