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Global Economy Bursting?

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Its amazing to me how people hear these figures and just take them in stride any more, not really having even the basic understanding of what has happened.
Do you think it would be a little different if the average household had $100,000 in the bank and now through no direct fault of their own wake to find only $60,000?:Eyecrazy:
Do you think there wouldn't be an immediate outcry with news media pundits and everyday citizens calling for someones head.:new_2gunsfiring_v1:
 
chart-family-income.top.gif


The average American family's net worth dropped almost 40% between 2007 and 2010, according to a triennial study released Monday by the Federal Reserve. The stunning drop in median net worth -- from $126,400 in 2007 to $77,300 in 2010 -- indicates that the recession wiped away 18 years of savings and investment by families.

Making matters worse, income levels also fell during the tumultuous three-year period, with median pre-tax income falling 7.7% as earnings from capital gains all but disappeared.
 
The calculations are based on "blue sky" figures, which included the housing bubble. As the housing bubble burst, values returned to earth. So the loss was in unrealized potential profits, not actual hard dollars. For those of us in "flyover country" who never experienced the runup in values, we have not seen the loss either. This is why such statistics always have to be examined in terms of where they are coming from, and if the source has a potential bias.
 
The calculations are based on "blue sky" figures, which included the housing bubble. As the housing bubble burst, values returned to earth. So the loss was in unrealized potential profits, not actual hard dollars. For those of us in "flyover country" who never experienced the runup in values, we have not seen the loss either. This is why such statistics always have to be examined in terms of where they are coming from, and if the source has a potential bias.

What you are not considering is the run up in debt with the housing bubble; cash out refinance, subprime financing, piggy-back loans (100% financing), interest only financing, and negative amortization loans. It is the reason why there are so many short sales and REO properties. If there was any equity left, there would be no problem. And the problem remains where there are so many people with underwater mortgages. That is compounded by falling incomes and unemployment.

Net worth has its place in finance. It is a relative measure of wealth. The wealth effect is well documented for consumer spending. Couple that with falling incomes and the economy is restrained.
 
chart-family-income.top.gif


The average American family's net worth dropped almost 40% between 2007 and 2010, according to a triennial study released Monday by the Federal Reserve. The stunning drop in median net worth -- from $126,400 in 2007 to $77,300 in 2010 -- indicates that the recession wiped away 18 years of savings and investment by families.

Making matters worse, income levels also fell during the tumultuous three-year period, with median pre-tax income falling 7.7% as earnings from capital gains all but disappeared.

Are you certain?

What was the statistical pool for the income and for the net worth?
One could be taken from only those that are employed and the other from a general pool which would explain the differences, but in which case the income drop may or may not be disturbing as it could indicate a shift from higher paying jobs to lower paying jobs or, even more disturbing, actual pay cuts. Alternately they could both be from general pools and thus as unemployment rose and housing values dropped sharply in some areas the mediums would be expected to shift downwards.

See, the average employer could well be giving raises in exceeding increases in cost of living and, just because we had a recession between those dates, the data still shows a drop due to loss of employment or a significant number of people initially losing jobs and finding lower paying ones.
The problem with statistics and statistical reports is that without the information on how they were taken and what pools they represent they only serve to support that saying popularized by Mark Twain: "There are three kinds of lies: lies, damned lies, and statistics."
In other words the graph you posted is just propaganda when pulled out of the context of its original creation (aka, the details of who, what, where, when, how and why).
 
I see no comfort knowing incomes fell regardless whether I know that is the population as a whole or simply those employed...from what I see, we've had a mass restructuring among those over 45 years old locally. Many went from factory jobs in the $15-20 an hour range to podunk jobs in the $10-15 an hour range...or simply took early retirement for lack of opportunity.

Certainly appraisers incomes dropped. My old loan officer is coming by to trim my trees with his tree service. All his bosses have retired or been fired and one peer moved from Pres. of a branch bank to a mere Loan officer in another bank. One local Realtor offers pony rides at the amusement park, another went to work selling baby formula.

To say that incomes have fell 8% or so in the past 5 years, imho...likely is pretty right on.
 
I see no comfort knowing incomes fell regardless whether I know that is the population as a whole or simply those employed...from what I see, we've had a mass restructuring among those over 45 years old locally. Many went from factory jobs in the $15-20 an hour range to podunk jobs in the $10-15 an hour range...or simply took early retirement for lack of opportunity.

Certainly appraisers incomes dropped. My old loan officer is coming by to trim my trees with his tree service. All his bosses have retired or been fired and one peer moved from Pres. of a branch bank to a mere Loan officer in another bank. One local Realtor offers pony rides at the amusement park, another went to work selling baby formula.

To say that incomes have fell 8% or so in the past 5 years, imho...likely is pretty right on.
Some of those factory $15-20 jobs are now $10-15 or less jobs. Last year I was able to pay off a lot of bills to where if things did get tough and I did get one of those jobs I would be OK. But actually because of my burn out in appraising and paying last years taxes and taking a break from trading I did take one of those jobs and I really do like it and is nice not being the boss for a change. :)
 
California higher education problems stem from resource allocation, report says

http://www.dailycal.org/2012/06/13/...ms-stem-from-resource-allocation-report-says/

A report released Sunday by the American Council of Trustees and Alumni proposed that California’s higher education problems stem not from a lack of funding but from a misallocation of current resources.

The Washington, D.C.-based independent nonprofit organization published the report amid debate about whether the crisis of public higher education should be addressed by increased fees, program cuts, alternative sources of revenue or a mixture of all the issues. The report notes that while tuition has increased by 28 percent across the nation in the last five years, UC tuition has risen 73 percent and CSU tuition has increased 84 percent.

Rather than driving up the price of tuition further, the report argues that public universities should cut programs with low enrollment and utilize online technology and cross-campus collaboration to make them become more efficient and accessible.

In 2010-11, the CSU system had 512 degree programs, and the UC had 792 such programs that produced fewer than 10 graduates, the report states. The report prescribes a transition to a model which utilizes online and shared resources between campuses to maintain programs lacking strong graduation numbers.

UC spokesperson Dianne Klein said the report had questionable methodology.

Aside from program “bloat,” the report suggested several other areas of improvements to efficiency that the UC, CSU and California Community Colleges should consider such as late graduations, better utilization of facilities and lower administration compensation.

“What should the 21st century university look like?” Poliakoff asked. “Should it be a brick and mortar institution of ever-growing buildings, or should it be looking at a more agile way at making the superb education it offers more available through technology interactive?”
 
Its amazing to me how people hear these figures and just take them in stride any more, not really having even the basic understanding of what has happened.
Do you think it would be a little different if the average household had $100,000 in the bank and now through no direct fault of their own wake to find only $60,000?:Eyecrazy:
Do you think there wouldn't be an immediate outcry with news media pundits and everyday citizens calling for someones head.:new_2gunsfiring_v1:

I don't recall a great hue and cry when people's "net worth" went from 60K to 100K through no direct effort by them.

What's the difference? Easy come, easy go. :blush:
 
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