Most Americans Hanging on By a Financial Thread

[bpr]

Re: Most Americans Hanging on By a Financial Thread

I was working at a home today and the owner mentioned they had to take in his sister in law and let her live in the basement. He wasn't too thrilled about it. Then at the end of the day, she drove up in her late model ESCALADE!

These kind of stories remind me that I'm really out of touch. Our little neck of the woods didn't experience a run-up in housing prices, and, some would argue, never emerged from the Great Depression and the loss of the coal mines. Population has been in decline here for over seventy years.

A co-worker sent me this link, which details a new user interface for computers, similar to that seen in Minority Report. At the end of the video, I was surprised that the audience found this even interesting, let alone the encouraging response she got from things like "it helps you to pick out a paper towel more suitable to your liking." If this is the stuff our tech industry is working on — just new ways to get fools to buy stuff — I believe we need a massive event (a sustained depression might do it) to refocus our energy and talent.

[triclipse]

800 FICO - hanging on By a Financial Thread

What is of concern to me is the number of people I know with excellent credit who are on the verge of bankruptcy. Granted, my experience is anecdotal, but we are far from a subprime meltdown.

[santafe2]

Re: Most Americans Hanging on By a Financial Thread

So what are the effect of tax increases at this point? I am at 52% with state and federal + being self employed I pay the full withholding plus another 5% for medical insurance. The new taxes coming in pushes it up to 60% -65%?

After our first 9 months with this new business we took a look at the value of having a presence in California. It has been the center of the renewable energy business for the last decade but we were surprised to find them picking our pockets for personal income tax. None of us live there and we don't own or operate a warehouse in CA but they still made us to pay personal income tax because we had a 3PL, (3rd party logistics provider), in CA in 2008.

The answer, we moved all of our inventory and 3PL to Nevada. We had a great provider in the Bay Area and all felt some remorse at leaving an excellent partner. We also met with our representatives in our little state and asked them to "man up" and fight CA. Nothing. Seriously, nothing.

Now we pay very little in state taxes. Locally we pay only on our salaries, and nothing to CA. We're reviewing how to donate the difference locally, something that will matter to our little 50 square mile community. We're lucky to be living in a time where we can build a business serving all of North America from such tiny backwater location.

To pay taxes is to be successful. To have options and choices should give us pause in 2009. For that I and my partners are thankful. If one is in the position to worry about taxes moving up over the next few years I cannot imagine complaining. Give to your community and escape your taxes. There are many people who need assistance.

[touchring]

Re: 800 FICO - hanging on By a Financial Thread

What is of concern to me is the number of people I know with excellent credit who are on the verge of bankruptcy. Granted, my experience is anecdotal, but we are far from a subprime meltdown.

In singapore, for mortgage application, most of the local banks don't care about credit scores (well, not exactly since a perfect score is required even before the application gets reviewed), otherwise it is an instant reject.

They will consider age (people above the age of 45 are at a big disadvantage), job income (interest/rentals income and stock earnings excluded), the company you are working at, how long you have been at your job, the amount of money in your bank (if you are taking a low six figures loan, forget it if you don't have mid-5 figures in deposits), and if you own any other real estate.

[Slimprofits]

Re: Most Americans Hanging on By a Financial Thread

This report is about 12 years too late, IMO. I could see it coming out of college, 20k in debt making nine bucks an hour, just like my peers. Totally unsustainable without major changes, and that debt was just for the education to get a decent job.

bpr nailed it. I've said this before on these pages, ours was the first (and hopefully the last) generation of total debt from the moment one turned 18 years of age; massively inflated college tuitions followed by credit cards, auto loans and massively inflated mortgages.

[Chomsky]

Re: Most Americans Hanging on By a Financial Thread

I'm not sure what to make of this chart. Does it really matter if one is 30 days or 18 days from personal debt destruction? In both my previous career and my current one we work with equipment with a high Mean Time Between Failure, (MTBF). It's one of our first metric conparisons. MTBF is the median failure rate. Who cares if it's 18 days or 30 days. That's a guarantee of failure.

Agreed. What I took from the chart was: the situation was horrible, and it's gotten significantly worse recently.

[santafe2]

Re: Most Americans Hanging on By a Financial Thread

Agreed. What I took from the chart was: the situation was horrible, and it's gotten significantly worse recently.

You may be correct, I hadn't thought of it that way. There could be a tipping point and the recent uptick in unemployment may be the agent which drives us toward that tipping point. Thirty days to living your car apparently did not trigger a level of fear great enough to make those at or below the median give up. But 18 days and 8% unemployment? That's certainly going to bring us more close to huge social issue.

In the light of EJ/Fred's prediction of 12-15% unemployment we can expect that 50% of 12% or 6% of these people to be living on the street or with family / friends. That number could easily be 10% of the US population by the end of the year if the economy doesn't pick up. Economically, we've been absolutely flat lined at the same level we were at in 1995 for over 4 months. That is, trying to run an economy with 305MM people at the pace we did when the US had 266MM people.

Sorry I don't have time to back up my thesis here, I'll start a new thread over the weekend so everyone can poke a sharp stick at my thinking...

[c1ue]

Re: Most Americans Hanging on By a Financial Thread

That is, trying to run an economy with 305MM people at the pace we did when the US had 266MM people.

That in a nutshell is the problem we're in - and applies all across the economy, world as well as US, government as well as private.

2006: 'X' employment, 'Y' GDP, 'Z' savings

2010: 0.8'X' employment, 0.9'Y' GDP, 0.5'Z' savings

[Chomsky]

Re: Most Americans Hanging on By a Financial Thread

You may be correct, I hadn't thought of it that way. There could be a tipping point and the recent uptick in unemployment may be the agent which drives us toward that tipping point. Thirty days to living your car apparently did not trigger a level of fear great enough to make those at or below the median give up. But 18 days and 8% unemployment? That's certainly going to bring us more close to huge social issue.

In the light of EJ/Fred's prediction of 12-15% unemployment we can expect that 50% of 12% or 6% of these people to be living on the street or with family / friends. That number could easily be 10% of the US population by the end of the year if the economy doesn't pick up. Economically, we've been absolutely flat lined at the same level we were at in 1995 for over 4 months. That is, trying to run an economy with 305MM people at the pace we did when the US had 266MM people.

Sorry I don't have time to back up my thesis here, I'll start a new thread over the weekend so everyone can poke a sharp stick at my thinking...

You mean like these people?

http://thelede.blogs.nytimes.com/200...ity-report/?hp

[ProdigyofZen]

Re: Most Americans Hanging on By a Financial Thread

Well, I live in Dallas, TX..... and it doesn't seem like the recession has hit around here for the most part. My parents were just in town for a week and we went to dinner every night. All the restaurants were packed and full of people spending...........All the restaurants had their lots full of cars. Although I was in the Galleria on sunday and it was decently empty... I usually see way more shoppers. People here at my work are mostly 6 to 7 figure rainmakers and I never hear any talk about financial stress on this trading floor. As for the other people in the company I have no idea.... all the backoffice, clearing services etc. I know back in my hometown the local Mall went bankrupt and I would say 35% of the stores closed in the mall, althought it never was any good and never had full occupancy. But that is in a mid size town 1 hr outside Washington DC in the DC metro area....

We shall see what happens

[LargoWinch]

Re: Most Americans Hanging on By a Financial Thread

You mean like these people?

http://thelede.blogs.nytimes.com/200...ity-report/?hp

I believe they are the same people.

Picture fest!

http://www.itulip.com/forums/showthread.php?t=8596

[gwynedd1]

Re: Most Americans Hanging on By a Financial Thread

These kind of stories remind me that I'm really out of touch. Our little neck of the woods didn't experience a run-up in housing prices, and, some would argue, never emerged from the Great Depression and the loss of the coal mines. Population has been in decline here for over seventy years.

A co-worker sent me this link, which details a new user interface for computers, similar to that seen in Minority Report. At the end of the video, I was surprised that the audience found this even interesting, let alone the encouraging response she got from things like "it helps you to pick out a paper towel more suitable to your liking." If this is the stuff our tech industry is working on — just new ways to get fools to buy stuff — I believe we need a massive event (a sustained depression might do it) to refocus our energy and talent.

Hi bpr,

What ever do you mean? Its this kind of capital equipment that is the roaring engine of wealth. As some people refer to the industrial revolution I often refer to the giant leaps that are made in fecknology.


This is brilliant.



What would we do without the Nordic bearded hat?

[mikedev10]

Re: Most Americans Hanging on By a Financial Thread

As one who is 30, I would agree. I'm "lucky" to have stumbled upon such "doom and gloomer" forums such as iTulip (note that I mean that playfully). By my friends and peers I'm still seen as quite the pessimist, even if I simply suggest taking prudent measures for insurance - having some cash at home in the event of a bank holiday/power loss (thus no ATM access or credit card machines working)/natural disaster. Or making it a priority to have six months' living expenses saved up in case of a prolonged unemployment. Or having some extra food around in case there's some interruption in the supply chain.

It seems many our age have gotten lulled into feeling that such things don't happen anymore - we've evolved beyond it - and thus it'd be crazy to take precautions for such an event. Even if you point out recent events where such measures would have made a huge difference - ie Hurricane Katrina aftermath - it still doesn't sink in that things aren't always going to be sunshine and rainbows...

i saved little, and only to buy fun goodies later, and remained completely poltically and economically ignorant until i first started following ron paul. luckily i wasn't carrying any debt other than car/mortgage when my awakening started and i had enough time to buy some gold and discover itulip as well, although i wish i listened better to the latter still ;)

[cjppjc]

Re: Most Americans Hanging on By a Financial Thread

You mean like these people?

http://thelede.blogs.nytimes.com/200...ity-report/?hp

Brilliant. Where is Sacramento supposed to get the money? Wait I know, they can sell bonds. Brilliant.

[tombat1913]

Re: Most Americans Hanging on By a Financial Thread

Post back in a year, wouldja, and tell us how that's working for you?

I'm not a doomer by any means, but if jobs evaporate in my field, a master's degree won't be worth squat (I have two, by the way). I'd rather have a year's living expenses in the bank (we actually have more) than a solar water heater on the roof.

How do you determine what a years living expense is if you can't predict inflation? I would argue that the bonars in your bank account don't amount to anything more than the blind faith we are talking about in this thread. Hard assets can't be inflated away, and neither can knowledge. Plus, who has a better chance of keeping/obtaining the few jobs that haven't evaporated, the guy with the masters or the guy without?