What A Warped Sense of Reality We Live In

along the same lines of the national average credit card debt (can't recall exact #, but in the thousands) most people are carrying....

 

$8,500 according to this article :-

http://www.kansaiscene.com/current/html/feature.shtml

Trying to find worldwide stats - anyone ?

Interesting article - apparently the Brits are only second to the USA internationally in our reliance on credit cards :-

http://uk.biz.yahoo.com/dealwithdebt/nationaldebt.html

No stats but interesting national comparisons :-

http://www.pbs.org/wgbh/pages/frontline/shows/credit/more/world.html

 

Another relatively recent (August) poll suggested that 18% of the average American's disposable income went to service/pay off debt. Total debt was a record high 115% of income in 2002.

And according to the Bureau of Economic Statistics, America's household savings rate ran around 1% of disposable income (it was negative this August). Contrast that with Germany (a little over 10%) , Japan (approximately 7%) China (approximately 25%), and England (5.5%).

None of which makes for happy reading.

 

As someone who falls well within the realm of those statistics, i think you're as close to reality as you can get... Are you, yourself, forcing 70% of America to live paycheck to paycheck...? Did you cast credit debt onto hundreds of thousands of unsuspecting citizens...? Or did you earn your place in society...? Don't feel guilty, don't feel like you're not in touch with reality...

 

Even more disturbing than the debt issue is the disparity in wealth in the United States. Consider this (based on the 1995 census): the bottom 40% of all households hold a little over 1% of the nation's wealth. The top 1% holds 30% of that wealth, the top 5%, 55%, and the top 20%, 80%.

It is a spread that has actually grown since 1979. Since 1971, the bottom 20% of families has seen their income rise by only 3%, the second quintile have grown 11%, the middle 20% has changed by 17%, the fourth quintile has grown by 26%, while the top 20% grew by 53% and the top 5% by 81%.

The change in after-tax income:
the bottom 20% grew by 9%, the second quintile by 13%, the middle 20% by 15%, the fourth quintile by 24%, and the top 20% by 68%, while the top 1% has seen their after-tax income rise a whopping 201% from 1979-2000.


Okay, now contrast this with the data from 1947-1979
During that period, family incomes rose

Bottom 20% - 116%
second uquintile - 100%
middle 20% - 111%
fourth quintile - 114%
top 20% - 99%
top 5% - 86%

 

Storm the Bastille!!!

 

There are people with Bill Gates-type money walking around, discussing the harsh realities such as yours... "Oh, my word...! There are actually people out there who have to work 100-hour work-weeks - for YEARS! - just to be able to afford a paltry 4K sq. ft. home and a measley 250K entry-level Ferrari...? Dear lord, that's terrible...!"

i'm not poking fun, but there's a balance to every level... Yeah, it's pretty harsh for some people, right here in America... Everyday i eat pretty much whatever i want, and at night i sleep in a warm bed and shower with hot water and i get from point A to point B in my car... These are everyday things for me that a lot of people in this country only dream of... It's pretty harsh out there...

That could certainly be possible...

 

I fail to see much problem. Why should the income of the bottom rise much more than that? Skill-less is skill-less is skill-less, no other way about it. The middle and upper classes have been racking up degrees in Engineering, CS, business, etc...MBAs, JDs, PhDs, MDs, and on and on. As America shifts to a service economy, skill-less workers become less important, and thus receive slower growing wages (or negative wage growth). It’s the natural economic method of encouraging growth in human capital and moving away from inefficient activities (read: manufacturing).

As for the top 1%, I'd be willing to bet that the majority of that wealth was created in the late-90s through today. This period has seen some of the highest levels of entrepreneurial activities ever. Entrepreneurs take on risk, but get rewarded very highly for it.

 

Unless you happen to be Halliburton, or Ken Lay and Andrew Fastow.

Then you made it the old fashioned way...... Criminal activity and corruption.

 

Yes, I'm positive all of the 1-3 million(depending on how you calculate it) Americans in the top 1% are dirty and corrupt...

 

The problem is simply this: as income spreads increase, opportunities for the non-wealthy dwindle. And the heart of the entreprenurial class you describe is most strongly affected. Further, disparities in income generate economic pressures that affect everyone - rising health care costs, welfare, etc. Consider it drag on the economy.

What is more, your suppositions - entrepreneurial wealth and wealth created largely during the 1990s - are wrong. The 1990s was a decade of increasing wealth, to be sure, but the income disparities in the United States look very similar if we use 1979 data (the bottom quintile has 4.3%, next quintile 10.3%, middle quintile 16.9%, fourth quintile 24.7% and fifth 43.9%). It is the distribution of that increased wealth (see above) changed very dramatically. In fact, the top 1% of wealth reaped over half of the stock return from the '90s stock boom. Hardly the model of the entrepreneurial society.

In fact, if we look at data comparing 1979-1998 - which includes the '90s boom, we find:

"Nearly 70% of the sons in 1998 had remained either at the same level or were doing worse than their fathers in 1979. The biggest increase in mobility had been at the top of society, with affluent sons moving upwards more often than their fathers had. They found that only 10% of the adult men born in the bottom quarter had made it to the top quarter.

The Economic Policy Institute also argues that social mobility has declined since the 1970s. In the 1990s 36% of those who started in the second-poorest 20% stayed put, compared with 28% in the 1970s and 32% in the 1980s. In the 1970s 12% of the population moved from the bottom fifth to either the fourth or the top fifth. In the 1980s and 1990s the figures shrank to below 11% for both decades. The figure for those who stayed in the top fifth increased slightly but steadily over the three decades, reinforcing the sense of diminished social mobility."

(For more on this see:
http://www.economist.com/world/na/displayStory.cfm?story_id=3518560)


Which isn't to say that I'm a socialist and advocate income redistribtion. (I'm shocked at you sarge! Who knew your breast harbored such revolutionary sentiments) But I do worry - in large part because I was one of those fortunate enough to benefit from the opportunity to move up in the world. And because I know well enough that our last census reported that nearly 1 in 8 Americans (12.1%) lived below the poverty line.

It is very easy to forget poverty - or to ignore it - and to argue that "the poor deserve it."

 

Why should Americans save money?

Seriously. The US Govt. is running annual deficits of $600+ Billion, a $7 Trillion existing overall debt plus intermediate and long term entitlement program shortfalls that exceed the specie of the entire nation. Not one national politician is even discussing fixing these problems. Of the many things all of this will ultimately lead too, the destruction of our monetary base is most pertinent to this discussion.

Those who are living frugally and saving every dime they can are going to feel pretty silly when their lifes savings is barely worth a nice dinner out.

Given our Govts spending addiction and total lack of fiscal responsibility I personally feel the average American is smart to spend it as he makes it and enjoy all that he can while it lasts. Managing cash flow is what matters today. Earn it, borrow it.... whatever as long as you make the payments baby!

Its going to be all about timing for the wealthy. Putting your money in hard assets and timing when to get out of dollar denominated liquidity.... because when the debt bubble finally pops, its going to get UGLY.



Terry

 

I was reading an article online, and it showed planes that will cost 100+ million for the super-wealthy(customized to play pool,get massages,etc)...and I'm here thinking 100,000-200,000 cars is alot....

 

Ghost, a regular dose (reminder) of reality and mortality is a good thing in my book.

Chris, well stated!

Sunny

 

Warped eh?

U.S. citezens living BELOW the poverty line live better than 85% of the world! Not an estimate either, this is fact.

The wealth of the U.S. lies in our rediculously high standard of living. Also, our upward mobility out of the poverty(misleading when you consider what we call poverty) level is such that 90% of those below the 'povery' line are in the middle class withing 20 years(U.S. dept of Labor).

We are not nearly as bad off as the rest of the world would love to believe.

Also of note, the 'poverty' line only takes into account income. Funny though, income does NOT take into account BENEFITS that were not included in worker's salaries 30 years ago.

Warped?

 

BRAVO Chris!

 

Yes. I'd like to see you go try to live on minimum wage, and try to save for any kind of retirement.

 

I would like to see you go work minimum wage in most other countries outside of the U.S. and see what you think about your statement's relevance.

Tell me, where in the world CAN you work minimum wage AND have a decent retirement???

One true test of how desireable it is to live in a nation is to look at how many people try to immigrate each year.

What we have here, and what is considered 'poverty' here, is much greater than your comment is suggesting(assuming you are trying to suggest further than the actual words you used).

 

Arent we all glad that one of the first agendas of the 2nd term president was to finally reform chapter 7 bankruptcy law in favor of the banks?

Arent we all glad that the price of a gallon of gasoline is what it is, and Exxon Mobile has posted some of the highest earning statements in history?? And im not talking their history, im talking IN HISTORY.

The fish stinks from the head down.

 

You're looking at it from the wrong direction. You need to take what it means to be poor in other nations and then rank the poor U.S. citizens in that scale to determine your place in it. Then and only then, will you have a true sense of what it means to be "poor" or "rich."

I've been to a couple of the poorest nations financially, industrially, scientifically, and socially remote. The question I have for you is are you pointing this out because you're bitter you're not one of the controlling rich or strictly for this forum's benefit being you're more likely wealthy to be participating at all?

Perspective is a wonderful thing.

Sunny

 

If your stupid enough to be working for minimum wage, then you
deserve to be poor. Even a complete moron can earn double that. I dont
see any of these "minimum wage" earners going to night school, working
two jobs, reading books on investing, or somehow, by some means trying
to better themselves to achieve more in life.

My wife was answering the phone, and sending packages out every day,
working as a receptionist while she was in school, and earning $14 an hour.
Can you tell me how much skill it takes to answer the phone, push a button,
transfering a phone call, and filling out an address label for a UPS package?

Basically she earned a 27k a year salary (if she worked full time). With 27k,
you can 1) pay rent 2) pay utilities 3) eat 4) own a very nice good condition
car. It baffles me how people still cant do this....

The girl that worked her second shift was constantly late, always needed
to borrow gas money, always "forgot" to do things that had time requirements
etc. Company went through a couple of these second shift receptionists
in two years.

You wanna see poor? Go live in Africa for a year. See how poor people live,
in shacks, no running water, no chance of employment, have to steal for food,
beg for money..... Thats POOR. The US version of poor is a JOKE,
the poor here live a middle class African or European lifestyle.

 

Without a DOUBT!

Everyone loves to whine about the state of our nation without taking into account any other nation.

Sure, the Europeans really have it all figured out! Oh wait, I forgot, I don't like 9% unemployment rates.....

 

Please excuse my ignorance, but what exactly are 'hard assets'? Do you mean things like real estate, precious metals?

If you do mean real estate, could the recent run-up of real estate prices - the bubble that the media is talking a bit about - be caused by wealth moving into real estate for protection and not by cheap money fueled speculation as many are guessing?