NET WORTH

rffrydr · Posted: Mon Dec 11, 2006 9:12 am Post subject: NET WORTH

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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rffrydr · Posted: Mon Dec 12, 2011 9:56 am Post subject:

401Ks...."Back to Even" was the goal--and maybe the thrust of the selloff?

When's the axe going to fall on the "missing" $1.3T in mortgage write-offs? I'll stick my neck out and say it's a small, tiny fraction of that. We should have learned by now that the market is always wrong. Indeed the very fact that so many homeowners held onto their homes despite all "rationality" has gone far to underpin CDO residuals that have long been written off as "toxic." --Thus becoming a "nutrient." A home is far more than an "asset"...it is the nest...it is the "american dream"...it's the american housewife's "gold"--and the yoke on her husband. And it's a depression so there really weren't any options to move to anyway (S. Dakota proving the rule).

Maybe it's not the retirement savings account once believed (even though many believe that still is the case) but throw on top of all this the perceived prospect of never being able to finance another home and...what do you know? A market "anomaly."

Additionally, these numbers are flattered by all who walked away during year-plus foreclosure proceedings which didn't reflect on their macro liabilities as well as all the private/public "work-outs" thru tertiary holders of mortgages.

The cherry on top is all the soured mortgages financed by, yes, the Germans. DB, IKB, Comedybank... how much of that writeoff is the currency effect of the "Great Bearded Dove dollar depreciation."
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rffrydr · Posted: Wed May 11, 2011 6:59 am Post subject:

401K plans back to even.

And, on the other side of the balance sheet, "The Number" has been relegated to the scapheap of Boomer history. For those comfortable in their "homes" it's a happier world. Smile

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rffrydr · Posted: Fri Mar 11, 2011 11:17 am Post subject:

Picked this one off wsj.com today:

rffrydr · Posted: Tue Feb 08, 2011 9:16 am Post subject:

Boomers hanging in there while secular retirements exacerbates jobless numbers--and pre-figure tepid stats going ahead.

http://media.bloomberg.com/bb/avfile/News/Surveillance/vS3h4kkTxWr0.mp3

Generational transfer still a wild card.
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rffrydr · Posted: Tue Dec 14, 2010 9:54 am Post subject:

Consumer potential deleveraging is probably overstated--boomers have their own private bailout fund, daddy:

http://www.allbusiness.com/personal-finance/446846-1.html

This is particularly true as THE leverage problem is the family home. Families will be brought closer and the asset is believed in by the folks. And in actuarial terms, we're now in the sweet spot when it comes to dying. Steinbrenner lead the way!
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rffrydr · Posted: Thu Sep 30, 2010 7:50 am Post subject:

Light volume not a curse when it's "buy-and-hold." "Accumulation" solid for the year--with almost nothing lost over summer:

http://stockcharts.com/h-sc/ui?s=$SPX&p=D&b=5&g=0&id=p91980232871
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rffrydr · Posted: Wed Sep 29, 2010 8:15 am Post subject:

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rffrydr · Posted: Sat Mar 27, 2010 7:48 pm Post subject:

Of peaks and Valleys and the ruler we use to measure them:

http://www.ft.com/cms/s/0/9a26665c-fe11-11de-9340-00144feab49a.html

Of course, GDP is any ruler but a straight one. Before the War it didn't exist---but you get the idea.
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rffrydr · Posted: Thu Sep 17, 2009 4:01 pm Post subject:

1st gain in two years shows just how far along we are in this process.
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HenryTo · Posted: Thu Sep 17, 2009 2:50 pm Post subject:

Latest household net worth numbers per the Federal Reserve's Flow of Funds 2Q 2009 data:

http://www.bloomberg.com/apps/news?pid=20601087&sid=augvPoOhLDlc

goldbug · Junior Poster Joined: 21 Jun 2009 Posts: 36

i would like to add that while savings are low compared to today's gdp, as savings increase and gdp descreases, it may come back to average levels sooner.

goldbug · Junior Poster Joined: 21 Jun 2009 Posts: 36

US Consumer Debt has to be paid off. Prechter explained this easy money - credit bubble problem in 2002 in his book Conquer the Crash. I read it and everything it said came true, in details. Except that he thought FED would not go to this extreme to save banks, risking it's own balance sheet to junk status. But now Prechter is discussing the latest FED action too and it seems FED will not be able to save the day after all. Food for thought: http://www.tradingstocks.net/html/the_last_bastion.html

rffrydr · Posted: Wed Jun 24, 2009 1:05 pm Post subject:

Well it's kicking in:

The rise in US personal savings

Published: June 24 2009 09:23 | Last updated: June 24 2009 15:51

Want to to know why US house prices are still tumbling and shops are vanishing from the high street? Check out the first quarter flow of funds data from the Federal Reserve. Personal funds were still pouring into real estate as recently as the third quarter of 2007. After that, when house prices really began to tank, net expenditure on housing drained out at a quarterly rate of between 4 and 8 per cent. During the first quarter of 2008, it dropped 13 per cent.

The data also show that Americans are finally waking up to the reality of saving. In spite of the recession kicking off over 18 months ago, personal financial flows only turned positive in the fourth quarter. Partly as a result, aggregate financial savings jumped from $90bn to $320bn this quarter, the biggest number in decades.

Even so, that rate of savings is equivalent to only 2.3 per cent of gross domestic product, having been almost twice that level during the 1990s recession and more than 6 per cent in the early 1980s. That is bad news for consumption, especially as the move to a savings culture is happening so late. In the first quarter, the ratio of gross household debt to disposable incomes fell only 2 percentage points to a still-whopping 127 per cent. At the current rate of saving – and assuming no change to incomes – it would still take 14 years to shrink the debt ratio to its average of 88 per cent since 1974.

That would be a long, nasty grind, increasing savings overall by a massive one third of gross domestic product. But it is just as likely that suffering consumers will start saving with even more verve. While that may be good for household balance sheets, it paints a grim scenario for the broader economy.
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rffrydr · Posted: Sun Jun 14, 2009 9:49 am Post subject:

Last quarter overview courtesy "The Church of the Second Derivative."

http://macro-man.blogspot.com/2009/06/what-if.html

http://macro-man.blogspot.com/

rffrydr · Posted: Fri Jun 12, 2009 10:48 am Post subject:

The self-employed:

http://www.nytimes.com/2009/06/07/magazine/07unemployed-t.html
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