Re: U.S. savings at Great Depression levels,article link


"Michael Scheltgen" <mjs818@xxxxxxxxxxxxx> wrote in message
news:DBBDf.270205$tl.96324@xxxxxxxxxxx
> Bill wrote:
>> "seeker" <mothman20052002@xxxxxxxxx> wrote in message
>> news:1138651314.596332.166350@xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx
>>
>>>http://news.yahoo.com/s/ap/20060130/ap_on_bi_go_ec_fi/economy;_ylt=AmKO6ovb8KkB8Rehpk.1kuas0NUE;_ylu=X3oDMTA3ODdxdHBhBHNlYwM5NjQ-
>>>
>>
>>
>> The article mentions American savings going negative for
>> the first time since the depression. (In net, we spent more
>> than we got in income from all sources.) And remember this
>> is at a time when 401Ks and health savings accounts are
>> being encouraged. It suggests that a perception of
>> increased home value or borrowing against home equity may
>> be at the root of this.
>>
>> People who are counting on there homes to provide a lot a
>> cash are in for a bit of a surprise. Assume, they are right
>> and home prices do not go down and even go up at a rate
>> that exceeds inflation to the time they sell. Of course
>> they are going to have to pay off the accumulated debt -
>> assumed to have increased at the time of sale because of
>> the negative saving - but they may get a bit of a surprise
>> when they find that the replacement house has also gone up
>> in cost.
>
> With current demographic trends persisting, where will the
> demand for housing come from when the baby boomers, their
> heirs, and others decide to sell at roughly the same time?
> Those population "pyramids" don't look promising to me at
> all, in fact, they look more like population "diamonds"!
>
> If you travel around cities like NYC or San Francisco, one
> will observe hundreds of thousands of housing units. Again,
> what happens when these people retire and/or die? I'm not a
> real estate market expert so this might be a dumb question,
> but I have to ask: is speculating in the housing market wise
> over the longer term? Thanks.
>
> Mike
>
>
>> Of course, if they are wrong, and home values have dropped
>> then they are worse off.
>
>
>
>>
>> Bill


the stated plan is to allow more imigrants, legal and illegal
into the country to work, pay taxes and support the retired SS
pay outs...and supposedly buy the real estate.

However as US corporations by various means, offshoring work
etc, drive wages in the private sector down the net incomes
will not be enough to sustain house prices... (civil service
is lush indeed however, police and fire retiring at age 51
with well over 100k a year for instance)...

If the USD is hyperinflated though, the house prices will be
sustained and the banks will remain solvent. Then if social
security payments inflate at only 2% the retirees will die off
early solving that 'problem'... in that fashion the police can
still retire with 5 million dollar anuities.

Whats wrong with that even from an entirely cynical
perspective is that any nation that hyperinflates its currency
looses favor with investors world wide, its industry fails...
in the US its is failing in the face of chinese competition
with an unlimited labor pool willing to work for a bowl of
rice.


It will be nasty in the US... as wages decline (cutting govt
income tax revenue in real terms even with hyperinflation)...
leaving property tax as the only source of revenue that has
leverage on the tax payer... pay or you will be living in the
street more or less.

This life style and approach is limitlessly stressful....it
shortens a persons life.

best imho is to step out of that loop by various means if you
can, its not easy. But it is pleasant.


Phil Scott
>>

.

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