MarketWatch featured a story titled “Seven Years of Wealth Gone.” Here are some highlights:
The nest egg of the typical American family is smaller now than it was seven years ago, according to Federal Reserve data released Thursday.
The inflation-adjusted net worth of the typical family increased 17.7% to $120,300 from 2004 through 2007, the Fed said Thursday in its Survey of Consumer Finances, the most detailed look at family finances available. Net worth is defined as assets minus liabilities.
“But a lot has happened” since the end of 2007, a Fed economist said. As of October, median net worth had fallen to $98,900, down 3.2% from the end of 2007 and 2% below the level reported in the 2001 survey that was conducted after the dot.com bubble burst. Since October, stock prices have fallen another 15%, while home prices have fallen at least 2%.
These facts simply support my argument that consumers have reached a dead end and are in for some changes. No matter how much stimulus is being pushed via various packages, most families are forced to make the switch from spending to saving with easy access to credit now being history, as I pointed out yesterday.
Lost wealth will need to be rebuilt via stringent savings programs and elimination of unnecessary expenditures. With many retirement accounts having been cut in half last year, I can only hope that investors have learned their lesson and run away in droves from anyone preaching buy and hold combined with a canned asset allocation program.
I for one will continue on the path of spreading the word about trend tracking as it seems to have been the only investment method which was validated last year.
Comments 7
Its almost funny when I try to talk people out of buy-and-hold strategy and point them to your blog for market-timing. Everyone is afraid of missing out on a big rally. They don’t really mind losing more than 50% of their investment to a bear. The worst is that no one believes that the market could go further down from this level.
I wish I had the advantage of your blog a year ago. I lost a lot of money but at least I have a strategy going forward.
You can’t “wipe out” something that was phoney to begin with.
All we’ve done is begun the process of reverting a bubble to the mean. And we’re not done yet.
I’m finding the cat fights between government employees and states to be very entertaining right now. There are a lot of policemen, firemen, and others who are about to find out that they really were not worth $40, $60, $80K a year.
G.H.
“There are a lot of policemen, firemen, and others who are about to find out that they really were not worth $40, $60, $80K a year.”
Not to mention the folks in the UAW …
BaJa
personally i feel the unions and there workers are the only thing that keeps the wages at a level so a person can afford groceries. It amases me how it is always the unions fault when the CEOs and our government robs and rapes this country. I know the previous post was put there by a labor hating individual so either he is a retired CEO or he is an envious non union worker. Usually the reason for not joining a union is because the worker doesn”t have the education or qualifications and sometimes this can be attributed from the person not having any work ethic and is just plain LAZY!!!! Snoobers
Lost Wealth is the least problem we
face- What is coming is Genocide as
our traditional Final Solution for
History has a way of repeating itself
Google “The Solar Mortality Theory”
for the FULL SCOPE of whats going on.
Anyone who thinks this is merely a
deep recession that will pass has
another think coming. Ulli, posting
critical excerpts from other sources
actually saves us time, you do the
InfoGlut filtering for us- Thks
The Govt. created this morass. Therefore a proposal which is passing around on the internet.
>
>
> The following would probably never happen but, even if we did half of the
> proposal we would save 4 billion a year….
>
>
>
>
>
>
>
> "The Proposal"
> When a company falls on difficult times, one of the things that seems to
> happen is they reduce their staff and workers. The remaining workers need
> to find ways to continue to do a good job or risk that their job would be
> eliminated as well. Wall street, and the media normally congratulate the
> CEO for making this type of "tough decision", and his board of directors
> gives him a big bonus.
>
> Our government should not be immune from similar risks.
>
> Therefore: . . . .
> Reduce the House of Representatives from the current 435 members to 218
> members and Senate members from 100 to 50 (one per State). Also reduce
> remaining staff by 25%.
>
> Accomplish this over the next 8 years (two steps / two elections) and of
> course this would require some redistricting.
>
> Some Yearly Monetary Gains Include:
>
> $44,108,400 for elimination of base pay for congress. (267 members X
> $165,200 pay/member per year.)
>
> $97,175,000 for elimination of the above people's staff. (Estimate $1.3
> Million in staff per each member of the House, and $3 Million in staff per
> each member of the Senate every year.)
>
> $240,294 for the reduction in remaining staff by 25%.
>
> $7,500,000,000 reduction in pork barrel earmarks each year. (Those members
> whose jobs are gone. Current estimates for total government pork earmarks
> are at 15 Billion per year.)
>
> The remaining representatives would need to work smarter and would need to
> improve efficiencies. It might even be in their best interests to work
> together for the good of our country.
>
> We may also expect that smaller committees might lead to a more efficient
> resolution of issues as well. It might even be easier to keep track of
> what your representative is doing.
>
> Congress has more tools available to do their jobs than it had back in
> 1911 when the current number of representatives was established
> (telephone, computers, cell phones to name a few).
>
> Note:
> Congress did not hesitate to head home when it was a holiday, when the
> nation needed a real fix to the economic problems. Also, we have 3
> senators that have not been doing their jobs for the past 18+ months (on
> the campaign trail) and still they all have been accepting full pay.
> These facts alone support a reduction in senators & congress.
>
> Summary of opportunity:
>
> $ 44,108,400 reduction of congress members.
>
> $282,100,000 for elimination of the reduced house member staff.
>
> $150,000,000 for elimination of reduced senate member staff.
>
> $59,675,000 for 25% reduction of staff for remaining house members.
>
> $37,500,000 for 25% reduction of staff for remaining senate members.
>
> $7,500,000,000 reduction in pork added to bills by the reduction of
> congress members .
>
> $8,073,383,400 per year, estimated total savings. (That's 8-BILLION just
> to start!)
>
> Big business does these types of cuts all the time.
>
> If Congresspersons were required to serve 20, 25 or 30 years (like
> everyone else) in order to collect retirement benefits there is no telling
> how much we would save.
> Now they get full retirement after serving only ONE term!
>
> IF you are happy with how Congress spends our taxes, then just delete this
> message. IF you are NOT at all happy, then I assume you know what to do.
>
Hi Ulli,
I belive the UAW has actually priced themselves out of work with their outrageous pay and benefits along with the tremendously over paid CEOs etc. Well guess what the auto workers are going to have to come down to the same pay and benefits as with the U.S. assembled Honda, NISSAN, Toyota cars and or trucks etc. or they will have no jobs anywhere. Everything in the world now seems to be repricing itself. It looks as if all of our past greed and high living has come to a head.
L.