Exactly. Why do I have to read this in an Asian paper, and not a US publication? Nevermind..
Leverage is the secret of American wealth. The average American family in 2004 had a net worth of US$448,000 on an income of $43,000, according to the Federal Reserve's survey of consumer wealth. Wealth equaled 10.4 years worth of income. In 1989, the Fed survey shows, it was only 7.3 years of income, and just 3.8 years worth in 1962. Measured in years, why should the ratio of Americans' net worth amount to annual income have tripled between the administrations of John F Kennedy and George W Bush?
I want you to get used to saying with me, "it didn't." In other words, you're not "worth" what you think you're worth, if you own a home, car, stocks, a 401K, or even an FDIC insured CD. Get used to this, because you're going to be forced to live in that reality, very soon.
That is an odd result. It cannot be due to productivity, because productivity should show up in higher income as well as higher wealth. I suppose one could argue that expectations for higher productivity growth in the future than in the past might jack up the ratio, but that is hard to believe that is true after the collapse of the Internet bubble. The answer is leverage.
If the wealth-to-income ratio falls back to its 1989 level, the net worth of Americans would fall by a third. That is a frightening prospect, but it is not necessarily the bottom.
One of the biggest and most pernicious myths of Republicanism over the last few decades has to do with productivity. While Republican policy was busting unions, enslaving the working class, infecting the workplace with harebrained schemes from MBA morAns who'd never done an honest day's work in their lives, shipping jobs overseas, breaking up profitable companies into saleable bits and giving control of them to foreigners, the whole time, what were we told? "Productivity" has never been greater! Yeah! USAUSAUSA!
But in fact, anyone with eyes could see where it was leading us. To becoming a nation that made nothing, imported everything, and existed as something of value only on paper.
...I'll conceed to being in one of those polemicist moods today, so forgive the hyperbole. But I think a lot of you are like me, people who've worked hard, tried to play by the rules, believed in the Dream growing up and while in school, and got fucked. I'm not asking for a pity-party so much as trying to convince those of you still in the middle and upper classes of Little People that it's going to happen to you too, and there's very little you can do to prevent it.
At most, Paulson's plan will preserve the privileges of the financier caste that enabled the debt addiction of American households; at worst, it will give a few of the bankers an extra couple of months to unload stock in financial companies before they, too, go the way of Bear Stearns, Lehman Brothers and Washington Mutual. It is very difficult to understand why Washington Mutual's share price fell to zero, and the shares of laggards such as Fortis and Wachovia Bank fell sharply, while other financial shares have risen. The differences between the business models of these banks are trivial compared with their similarities.
Or as a friend of mine likes to say, "there's not enough money in the world to cover the Shitpile entire." More relevant to you, there's not enough money in the FDIC to ensure all of what you have in banks, and anyway, the bankers have already pushed their way to the front of the line, so when it's your turn for a handout from "your" government, expect a couple of beans, if you're lucky.
The trouble is that no one knows where the process will end. American households cannot be worth 10 years of income, but should they be worth seven years of income as in 1989, or just three years of income as in 1962? Where should American home prices find a level? If they return to the prices of 1998, they will fall by half, which is where homes offered in foreclosure are clearing the market today in California and Las Vegas.
Banks that provided the leverage for American households and corporations will remain under siege until asset prices find a level, and that will take two years, give or take a lifetime.
My prediction: turtles all the way down. I'm sitting right now inside a home that the owners have mortgaged for ~$500K. I feel very sorry for them, because they are going to keep paying that mortgage, and when they're all done, they will have a big, energy sucking, long drive from everything, made of substandard/disposable junk from China, hunk of crap to show for it. It's a "lovely" home in a "lovely" neighborhood though, "everyone agrees." But you can't eat it. And it's in a 5b, which means the owners better start erecting some solar/wind pretty soon. Gets cold up here, it does.
Anyway, on the 'all the way down' part, what I mean to say is take a look at "who's in charge." Our fine Dems? Gimme a break, they're tripping over themselves to pass this bailout bill and the vast majority of them haven't the first clue about economics; they don't know what it will do and they don't care. They're just going along with their best buddies in the Village
, those lobbyists and corporations who write laws for them to pass. Republicans are even more enthusiastic for a return to a Depressions state; it frees them to do every great evil they've been fantasizing about since the Civil Rights era. Police states work just fine for them, and we're going to see an increase in the number of times when "we need more security" is the answer to an economic problem. Dems will go along with it.
So, what is to be done? The PB 2.0 is a part of the solution, but so is gardening, paying off/down anything you own on your home, spending your money on things that are imported while you can still get them, forming better relationships with your community and immediate neighbors, patching up old wounds with family and friends, and most importantly, letting go of consumerist habits. You can teach yourself now, while inflation and energy costs make it easier. But learn to get along with less, a great deal less. Because you really won't have a choice.
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They say that money can't buy happiness.
But it can sure take the sting out of being unhappy!
[ ] Very tepidly voting for Obama [ ] ?????. [ ] Any mullah-sucking billionaire-teabagging torture-loving pus-encrusted spawn of Cthulhu, bless his (R) heart.
"First they ignore you, then they ridicule you, then they fight you, then you win." -- Mahatma Gandhi
If Money Can't Buy Happiness, I Guess I'll Have to Rent It
The more things "change", the more they stay the same. "This Is The Life" by Weird Al Yankovic from 1984.
"Do what you feel in your heart to be right -- for you'll be criticized anyway. You'll be damned if you do, and damned if you don't. " - Eleanor Roosevelt
The Video
Can be found here. Tellingly, it was originally written for Johnny Dangerously, a movie about gangsters. Sounds like Wall Street and the Village
to me.
"Do what you feel in your heart to be right -- for you'll be criticized anyway. You'll be damned if you do, and damned if you don't. " - Eleanor Roosevelt
Of Course the Wealth Was Totally Fake
You can't have a wealthy nation with stagnant wages. This entire thing has been funded on the real estate bubble and credit. It's all been to hide from regular people how shitty their real finances are so they will keep letting the rich get richer. And now the regular people will crash back to earth and realize they're making a fraction of what people were making 30 years ago, while the rich get bailed out.
"Do what you feel in your heart to be right -- for you'll be criticized anyway. You'll be damned if you do, and damned if you don't. " - Eleanor Roosevelt
Money is NOT what makes a person worthwhile.
I have been screaming that for thirty years, mostly to a deaf world.
Knowledge, ability, skill, willingness to work, and basic decency -- whether or not you call upon any deity, and if you do be its name Tunkashila, Flying Spaghetti Monster, the Prophet or the Lord: that's your business, and how you make your homage, which I've noticed many make in deeds and walking the walk of their faith with more effect on the lives they touch than with the money they pour into coffers, is your business too -- ought to be of a great deal more value than mere cash.
But as far as money taking the sting out of being unhappy, lambert, I'd argue that it doesn't do so with spectacular effect in many an infamous case. Names like Hilton, Spears, Vince Young, Kurt Cobain come to mind.
And CD, the wealth of which you speak is an artificial measure, made up of numbers generated by artificial formulae.
The families of 1962 were probably the last ones in which a single-income family didn't equal an impoverished family, by the living standards of the day. I was too young to remember much in '62; I think that was the year I drank my first gasoline. I remember some of 1963: my mother and godmother selling pink-flocked Christmas trees (pink? yeah. Some of the 'flocking' is still stuck to the hoses on the still-working Kirby vacuum they used, which I inherited when she passed away in 2001); trying on a Packers helmet at the local five-and-dime, and being mightily unhappy when told I could not have the (fairly costly) toy (first brush with football, but not the last!); crossing the quiet street in front of our house to play with my best friend, who had a battery-operated "flight simulator" toy: you sat in a chair with this thing in your lap, pushed a button that lit up a screen that looked like an aerial map, and turned the 'wheel' to drive a plane across the map; "helping" my dad grease the bearings in my aunt's 1960 Dodge, and playing cowboys-and-indians with my cousins on their farm, an hour's drive away. Oh, and 11-22-63, with Walter Cronkite on tv at the wrong time of day; but I really remember the day Oswald was shot better. I guess I was more focused, or something.
My dad had a job all day Monday-Friday, and until noon on Saturday, back then. So far as I know that's still the norm in auto mechanics' shops -- the dealers are open until noon on Saturday, so the shop is open too. My mom worked at home -- her house was always spotless, you really could have eaten off her floors -- and was a notary public, too. But our family was farmers, and we chopped cotton or moved pipe with / for them in the summers. In fact, in 1984, my mom officially chopped cotton, and got a paycheck and FICA and everything, for one of my uncles to "complete" her eligibility for Social Security. Sometime during the Reagan administration, it stopped mattering if you'd paid in for 20 years and started mattering how many 'quarters' you had worked, and paid FICA in, after you turned 60. Needing to qualify for Medicare and Social Security meant she had to work more 'quarters'. She wasn't a licensed accountant and didn't want to drive a truck at the local gin (although she could have, and had before I was born) or grain elevator. So we all chopped cotton and moved pipe that summer. Work like that makes you appreciate a job that comes with air conditioning and a comfy chair.
I don't deny we're all liable to have to learn to get along with less; I don't deny we're all apt to have to learn to count our riches differently. But it really is going to depend, a lot, on how you count your riches; if you can sew, garden, put up food, and repair things -- especially repair costly things like cars or computers, the coming crash will not treat you as badly as it will if you are / can be only an accountant, for example.
The days are no farther away than a storm over the Gulf when material possessions reveal their true worth: ephemeral and troublesome, and often pointless at the crest of the crisis.
We can admit that we're killers ... but we're not going to kill today. That's all it takes! Knowing that we're not going to kill today! ~ Captain James T. Kirk, Stardate 3193.0
We can admit that we’re killers … but we’re not going to kill today. That’s all it takes! ~ Captain James T. Kirk, Stardate 3193.0
1 John 4:18
Nancy Pelosi is speaking in support of the Paulson Fix; she was
almost breathless in describing Bernanke's expertise in the causes of The Great Depression and his telling Congressional leaders that what we're facing, the Big Shit Pile mess, is a one in a hundred year occurence. And, how, she asked, did this sneak up us "almost on little cat feet"?
Oh, my. She has been well and truly bamboozled--they all have, those Dem leaders. And it seems she had little exposure to any of the years of warnings from some economists, year plus of others. That was just sad to hear. Our first female Speaker of the House--and she knew dipshit about the warnings and looming problems. Oh, my goodness gracious.
But, she says, the party is over for Wall Street. About a bill which is intended to extend their party just a bit longer (long enough to get their assets into something safe?).
We are so fucked. (Is that line trademarked?)
Your lovin' give me a thrill ;-)
Liverpool Dec 7,1963
That's not the half of it
The great engine driving capitalism is the ability to borrow against future anticipated growth. Had that secret not been discovered, capitalism would have long ago fallen victim to the Malthusian problem of population growth outstripping economic productivity. For the last 200 years, every time the engine shows signs of grinding to a halt, somebody discovers a new trick that enables the debt machine to keep going for another generation or two. The current situation is no big surprise, it is merely the natural outcome of everything we've done for the last 250 years. Either somebody is going to discover a new trick to keep the debt machine going, or we're all going back to about 1750.
...for the rest of us
...for the rest of us
Thank you!
Just thank you for being a pleasure to read