bostonbubble.com

Boston ITer · Guest

http://seattletimes.nwsource.com/html/nationworld/2008898320_scared21.html

I'm curious about the above article, how true is it? And secondly, isn't that what the whole RE bubble was about, people with good incomes, stretching to get into a home and thus, barely having a month of available cash for a layoff?

StallionMang · Joined: 29 Apr 2008 Posts: 54

Betcha BBubble readers are smarter than your average Bull - and bound to have more savings. I can't fathom living month to month by choice. I'm happy to be a credit card 'deadbeat' with a zero balance Smile

But the Conspicuous Consumers made up for us. Household debt surpassed GDP in 2007:

WestCoastXPlant · Guest

very likely:

http://www.bea.gov/briefrm/saving.htm

On the positive side, with people being laid off left and right, it seems to be rising. But it's no surprise -- just the amount of student debt in recent years (not to mention consumer debt and housing prices) would have led to this...People talk about being house-poor but I know of MDs who already come out of school with a mortgage equivalent worth of debt (yes, yes, I know, they'll make a lot of money Laughing

)

StallionMang · Joined: 29 Apr 2008 Posts: 54

http://online.wsj.com/article/SB123120525879656021.html

balor123 · Joined: 08 Mar 2008 Posts: 1204

And the Fed is making it increasingly difficult for people to build up those savings by making that "investment" less attractive. It's especially hard when you are trying to keep a down payment for a house in the bank. Between the two in this area you're looking at >$150k! At this point, I'm surprised that banks even want money from consumers. Thankfully, we still have reward checking accounts paying 4-6% but it's hard to get $150k earning that rate. MM funds are near zero and high interest online savings account are around 1.5 - 2%. Mixed picture on how inflation is progressing.

GenXer · Joined: 20 Feb 2009 Posts: 703

balor123: True - this is why there are still short-duration and/or municipal bonds for those who would like a little more risk. But you are right - emergency cash is not earning much at all, which is a huge problem for huge savers. However, like all things in life, this one is only temporary - government intervention has its limits too.

StallionMang: Do not forget that government is now keeping a lot of people on unemployment, and that this unemployment is mightly long (maybe as long as 2 years?). I know it is definitely longer than a year. Coupled with bailout for those who should not have bought in the first place, I think this may slow down the effect of job losses, at least temporarily. Their hope is that this recession does not last long, in which case this may actually work as intended (i.e. keep houses unaffordable and keep those who bought those houses in a permanent state of unaffordability, i.e. 50% or more of their check going to pay for the house and a 0 savings rate). However, if this recession lasts a couple of years, the bailout will most likely not help.

Boston ITer · Guest