NET WORTH

[rffrydr]

Impressive on it own but that's a graph I'd not be leaning on too hard. That asset/liability ratio could be seen as a measure of the degree the american soul has been parceled off to banks et. al. --which may account for the more-than-a-decade long power rally in the Banking Sector.

Looks like the great savings boon of the 90's more than "lost" in the subsequent recession with leverage chasing leverage in an effort not just to make up for losses but fill the ever-widening retirement gap the "biggest spending" generation facing.

More to the point: this is a dangerous time to be relying on such a measure. The 2000 census evaluation of same,

www.census.gov/prod/2003pubs/p70-88.pdf

....shows 32% of that "net worth" as equity. No doubt for the majority of homeowners across the country as a whole this contribution will stay high but at this point it is by no means clear that home prices are not the same kind of bubble we got in stocks at the turn of the millenia. As this measure came before the big run I wouldn't be surprised to see real-estate's contrubution in excess of 50%. And how much of this is further leveraged to more real estate? Aside from the outright speculators the idea of a second, or "vacation", home has become practically a social movement.

Also included in that figure is the automobile. The HELOC financed Hummer does wonders for the Net Worth equation but what kind of net worth is that. Looking only across the Pacific to Japan with its first signs of life in a 17year real-estate bust underscores that "the only obvious asset class that can play a significant role in shaping household balance sheets" is hardly the stock market.

Also included in the networth figure are household businesses which can expect to crack with the rest in the event of recession. Then, depending how you chart it, the Census Report shows declining networth in keeping with the Asset/Liabilty equation from '83-'93--which accords with the go-go retail decade that it was.

It will be interesting to witness how a generation makes the tranistion from their homes to their condos on the links without disrupting this "net worth." Immigration? Maybe. Generational wealth transfer more likely--in the end, going back to Mom and Dad.


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Today is the Tomorrow you worried about Yesterday!

[rffrydr]

Americans save too....much?!

http://www.nytimes.com/2007/01/27/business/27money.html?_r=1&adxnnl=1&oref=slogin&adxnnlx=1169960540-xU3Tn9+5TbG2utye9z0qjA

Master H., are your vulture capital friends selling us a bill of goods? Again equity looms big in this picture.
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Today is the Tomorrow you worried about Yesterday!

[rffrydr]

On the flipside, A million dollars apparently is just not what it used to be; the SEC said Tuesday it is moving to increase the minimum net worth required for investing in hedge funds to $2.5 million from $1 million.
The proposal is expected to be voted on, and then undergo a public comment period. The $1 millionnet worth criteria has been in place since 1982.
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Today is the Tomorrow you worried about Yesterday!

[rffrydr]

Exerpt in latest Mauldin:


"Only asset-driven wealth effects can explain how a decade of frothy consumption growth (3.7% in real terms) has exceeded after-tax real income growth (3.2%) by an average of 0.5 percentage point per year. With the last bubble now bursting, I suspect that the wealth effect is about to turn negative for overly-indebted, saving-short US households -- dragging consumption growth below the pace of income generation as rational households abandon asset-based saving strategies and return to more of an income-based approach."

I'm suspicious of that second part: the whole idea behind "asset-based" savings is that it's not really savings at all! Baby boomers.
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Today is the Tomorrow you worried about Yesterday!