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Re: Charting FIRE's Fever
Chart Notes:
“the rich hold assets, the poor have debt” is how Citi’s Matt King described the distribution of wealth in the US.
QE has resulted in a loss of purchasing power for the US dollar. Faced with this problem, consumers in the middle class are taking on more non-housing debt in order to maintain the same standard of living. In addition, the US government – which continues to run a deficit year after year – continues to accumulate debt. Due to these facts, total debt outstanding – aka credit market instruments for all sectors - is at all time highs. More debt means more interest payments and lower savings rates. These trends do not bode well for the middle class.
On the other hand, QE has been great for the rich. QE has inflated the prices of assets such as property, bonds, stocks, and non-home real estate.
Home prices in Detroit are going up despite the fact that the city is bankrupt. The “housing occupancy” table is meant to show what appears to be a higher than average amount of speculative demand i.e. lower than average owner occupancy rates.
The rich have most of the assets which is why the average family income of the top 0.01% increased by 76.2% from 2002 to 2012. In contrast, the average family income of the bottom 90% decreased by 10.7% over that same period.
Taxes as a percentage of real disposable income have more than doubled since 1980. This trend has not been kind to the bottom 90%.
Median household income has been in a downtrend since the late 90s.
Unless the distribution of wealth in America begins to change for the better, assets will continue to benefit the rich and debt will continue to burden the middle class and the poor. -
Re: Charting FIRE's Fever
recently I heard from some former neighbors from a town we once lived outside of in Cali:
I live on Azalea Way, the boulevard of broken dreams. I walk down the street every day past the abandoned cars and derelict homes. One house even has a rusty travel trailer parked diagonally in the driveway. Another has an abandoned motor home in the backyard. The lawns are dead or dying, the fences are falling down, etc.
Most have extra derelict vehicles because their kids came home and are out of work. It's depressing, I try hard not to look as I walk by. Most of the homes are rentals. Those who can, leave. Does the town have a future? Perhaps it may become a ghost town, Azalea Way already is.
Steve's remarks regarding the area on correct!. Walking from our house to his one must pass many homes where the lawn has not been taken care of---old trailers, RV's and overall just plain junk litter the front and back yards! Appears that trailers in the back yards are being used as rentals ( one in particular is very obvious!). Too bad the city does little to nothing about this problem.
That becomes a judgement call in a dismal economy.
judgement call by who?---Plain common sense shows that stopping this will slow down the demise of a neighborhood together with the property taxes being collected!
A judgement call based on how many of your constituents are in dire straits. I don't like it - it's what it is.Comment
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Re: Charting FIRE's Fever
Don, where are these charts from? Stanley Druckenmiller presentation?Originally posted by don View Post
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Re: Charting FIRE's Fever
A variety of sources, all I believe (hope) labeled.Comment
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Re: Charting FIRE's Fever
How much of the large amount of assets held by the top 20% is explained by demographics and compound interest?
Since pensions were done away with by many companies 20 to 40 years ago, a large amount of employees have saved in 401Ks for decades. At the same time 30 year mortgages have been paid down to little owed or paid off.
Studies I've seen show that 90% plus of middle class boomer wealth is in houses and 401k/IRAs. Compound growth of retirement assets and little or no debt going into retirement with a house paid for can skew the asset figures greatly.
There are about 85 million boomers, 65 million of their children's generation, and 80 million millennials.
http://en.wikipedia.org/wiki/Millennials
The 65 million echo boomers still are building retirement plans, have high mortgages on the bigger home they had to house their kids, and are just starting to pay for college.
Is it any wonder they don't have assets.
The millennials own nothing, are just starting careers or still in school, and are facing high housing costs.
Yes, there is a concentration of wealth built up in the 1% on income earners. But when an ordinary family has simply saved and paid down debt as they approach retirement, the media and politicos shouldn't demonize them for prudent finances.
Here's some FED data that sheds some light on my thesis:
http://research.stlouisfed.org/wp/1994/94-002.pdf
http://research.stlouisfed.org/publi.../07/9707jw.pdf
I'd like to see a study of this to give clarity to the inequality and envy issues. At the same time we need to downsize FIRE and grow TECI to get the middle class back to work. We also have to work on the structural issues to create more jobs for all.Last edited by vt; January 03, 2014, 03:22 PM.Comment
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Re: Charting FIRE's Fever
+1Originally posted by vt View Post
and The ONLY Way THAT will have an icebergs chance in hell of ever happnin?
is with TERM LIMITS IN CONGRESS
else NOTHING will _ever_ change - esp the stats on how many of em enter congress, either house, as middle-upper but gen'ly working class - and LEAVE AS MILLIONAIRES WITH GOLD-PLATED LIFETIME-GUARANTEED PENSION AND MEDICAL BENEFITS!!!
the current occupant of 1600 penn ave being the primary example.
and comments such as "if term limits, then the lobbyists will be the smartest guys in the room"
are nothing but apologists for the political aristocracy!Comment
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Re: Charting FIRE's Fever
Oh okay you made it, I thought it was coming from one source, sorry!Originally posted by don View PostComment
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Re: Charting FIRE's Fever
Can't take credit for that. Compiled originally on Zero-Cred. Posted only those made by others!Originally posted by ProdigyofZen View PostComment
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Re: Charting FIRE's Fever
Ah okay no worries.Originally posted by don View Post
I had a discussion with a friend who is a PhD Economist and teaches in academe. I described the FIRE economy and how the ones in those industries have accumulated so much capital from economic rents that they now control the political process/laws through lobbying etc and have for the better part of 30 years.
He said "I think you are believing in conspiracy theories"Comment
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Re: Charting FIRE's Fever
A classic response from academia. Hang it on the wall!Originally posted by ProdigyofZen View PostComment
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