From: Steve Schear <s.schear@xxxxxxxxxxx>
Date: January 8, 2006 9:16:49 PM PST
To: dewayne-net@xxxxxxxxxxxxx
Subject: Re: [Dewayne-Net] Americans saving less than nothing
At 07:28 PM 1/8/2006, Dewayne Hendricks wrote:
Americans saving less than nothing
Spending could outstrip income in 2005, which hasn't happened since
the Depression
- Tom Abate, Chronicle Staff Writer
Sunday, January 8, 2006
Given how much red ink households racked up in the first 11 months of
last year, Lansing said the nation's personal savings rate could well
be negative for all of 2005.
That, he added, would be "the first such occurrence since the Great
Depression."
Due to the weakening of contract law by the courts, allowing
companies to shrug off pension obligations and shift them onto the
backs of citizens, perverse incentives in our tax code and aided by
the Federal Reserve almost all of most middle class family's net
worth's are whittled down to their homes. The lack of real savings
and the economic cushion it affords means many families will be
unable to weather any sustained downturn and, despite assurances to
the contrary by the ever rosy sycophants feeding at the public
troughs, trigger a second Great Depression. One of the excesses
that proceeded the Depression were zero-down, interest-only, home
loans very similar to today. One of the reforms put in place after
the depression was a requirement for a conventional mortgage.
The savings situation is made far worse by the enormous balance of
trade deficit, public and private debt (and average of > $350,000/
citizen) versus their net worth (< $50,000). Writing in the spring
issue of The National Interest, the venerable Peter F. Drucker
asserted: "The U.S. government deficit . . . is fast becoming the
sinkhole of the world financial economy. The persistent U.S.
deficit creates a persistent deficit in the U.S. balance of
payments, which make both the U.S. economy and the U.S. government
increasingly dependent on massive injections of short-term and
panic-prone money from abroad."
When the U.S. Treasury reported the official 2004 federal budget
deficit at a record $413 billion the hisses and boos in the
financial media were unrelenting. Two months later, the Treasury
reported the actual 2004 deficit -- using generally accepted
accounting principles (GAAP) -- was really an incredible $11.1
trillion [1], up from $3.7 trillion in 2003, yet nary a word was
heard in the financial media, from Wall Street or from any
political denizen of that former malarial swamp on the Potomac. An
exception, of course, was Treasury Secretary John Snow, who signed
the government's financial statements, but the data release was as
low key as physically possible. http://www.gillespieresearch.com/
cgi-bin/bgn/article/id=596
If events follow their usual course, after the coming financial
debacle has laid waste to most American's dreams of continued
prosperity for themselves and their children and a modicum of
comfort in retirement and the bread lines return and then recede
into history those in authority will once again be successful at
deflecting blame from their unwillingness to rein in public
spending, the ponzi game of wealth redistribution through taxation
and their mismanagement of the currency in pursuit of unwise social
programs and the repayment of powerful political patrons.
Steve
The past does not repeat itself, but it rhymes.
Mark Twain
We learn from history that we do not learn from history.
Hegel