Luxury car sales are down -- but does that really mean the rich are spending less?

It's been widely reported that new car sales are in the toilet, but the carnage isn't limited to economy-priced vehicles. According to Autodata, Mercedes-Benz sales fell 3.7% compared with March last year, BMW and Lexus fared worse, dropping 8.7% and 13.6% respectively. Luxury vehicle sales are off about 13% year to date.

The USA Todayspeculates that "Purveyors of the finer things in life are finding their well-heeled customers are caught in the same economic riptide tugging at the less well-off."

But I would suggest that there's something else at work here. Easy credit and a consumer culture focused on conspicuous consumption meant that a lot of people were buying luxury goods who had no business doing so. There's really no way to tell whether someone is rich anymore, short of looking at their tax returns and bank balances. Anyone could buy a Lexus, provided he could make the monthly payments which were artificially low because the Federal Reserve was taking an ax to interest rates -- at the expense of retirees living on fixed incomes.

Now the posers are being flushed out of the luxury goods market as the credit markets tighten. As Warren Buffett has said, when the tide goes out, you get to see who's swimming naked. And there were a lot of people driving BMWs in their birthday suits.