Oh boy. Alot of that "trillion with a T" is based on real estate values. It's not cash in the bank. On paper doesn't mean crap unless you got it in your hot little hands. If RE bubble goes poof? I don't think it's going to pop, but it will only do so if jobs aren't sustainable (back to my argument above).

If you remember the recession of the late 80s/early 90s (the "Reagan hangover"), you'll notice there were alot of people with crazy debt then too. When they lost their jobs, and their real estate went down, they were sunk (couldn't realize any of their "worth on paper". All the optimism in the world didn't work. This is reality: JOBS JOBS JOBS..... Cash is king....

Next?

In other words, American households may be borrowing more today, but they’re acquiring even more assets. And thanks to low interest rates they’re borrowing in an environment that is particularly friendly to borrowing.

But that makes the current situation unsustainable because as interest rates rise that "friendly to borrowing" thing will dissapear.

Man, you guys are just so rooted in doom, I don't know how to talk you out of it. Please tell me you don't have this mental outlook at mile 15 of the marathon.

You can look for gray clouds behind every silver lining as you like, and you will surely find some. If the chart goes up a little, you say it is not enough to make a difference. If it goes up a lot, you say it is a bubble about to burst.

Put away all your charts. Lift up your heads and look around. There were over 2,000,000 new homes built in the United States last year. Unless you think these are going to be repossessed and exported to India sometime soon, it is pretty hard to argue that the wealth of the country has not increased in real terms by the value of those homes.

It is the same thing all over. Nice cars, new electronics, new roads, schools, bridges, sewer plants, electric plants, water lines, cell phones, satellite dishes and triathlon bikes. The list goes on and on. Juggle numbers, debt, cash flow, income states and any other financial instruments any way you like, and it does not change the underlying economic reality of never before imagined wealth.

It takes courage to deal with the fact that society around you is doing great since it forces you to deal with your own missed goals.

We all have missed goals. Get over it, and be thrilled with the accomplishments you had along the path.

Man, you guys are just so rooted in doom

Ha! That's pretty funny. Actually, my personal outlook is very good. I've got a job that is in very high demand (due to the current regulatory environment), will never be outsourced, pays a very good bonus (although only a mediocre raise). I'm just pointing out the "holes" in your "optimism". You also have to realize that everything isn't sunshine and roses. There is a growing number of people that fall under the poverty lines. As a whole Americans are in major amounts of debt and relying on their real estate values to get them through tough times.

1870? Conditions didn't get better for the working man until WW2 and after. So I'd be pessimistic as all hell if I were living in 1870. Because nothing would change in MY lifetime.

I never said "class war". The reality is, today businesses have positions titled "Vice President of Outsourcing" on their books. Businesses have a right to try and minimize expenses, but if you're asking me to look brightly on the future with the sharks swimming past me in chum filled waters, you're high on the Kool Aid or wearing really bad sunglasses.

These are the good old days, but get your head out of your duff and have some realism. Isn't that what being pro-business is all about? Numbers are cold logical things that can kill or revive your business. Guarded pessismism is for the employees of a company. Optimism is for the VPs who are secure in their positions and salaries/bonuses.

This is classic. You are doing very well, but, because of the terrible media coverage, you are really worried about your neighbor.

That speaks very well for you and your regard for your fellow man, but it does not show that you are in touch with the overall reality.

There are always current problems and looming problems and imagine problems to fear. Deal with what is. It is hard to deny if you look around.

"1870? Conditions didn't get better for the working man until WW2 and after. So I'd be pessimistic as all hell if I were living in 1870. Because nothing would change in MY lifetime."

This shows that most people's knowledge of history begins with their lifetime.

As for cash being king, let me assure you that today that is not the case. When I had my development for sale, everyone wanted to know me. Now that I have sold it and have cash instead, I can't get my phone calls returned.

"You have cash? So what? So does everyone else."

You seem to be pretty good at reading what you want to and not what is actually there.

I'm not saying anything about how the economy sucks and everything is doom and gloom, but I'm also not saying that everything is just peachy and great. The true answer is somewhere in the middle. The economy has been growing well and aside from high gas prices inflation is very low. But there are also signs of danger on the horizon and to flat out ignore those signs is foolish.

With all of this excess wealth (assets >> debt), tell us about the rising bankruptcy rate. Or is it just possible that the vast amount of the wealth is concentrated among a very small percentage of the population, and in fact the vast majority of households are not in a situation where assets >> debt?

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"Go yell at an M&M"

It's better to focus on things we can change in our own lives and not expect any government to do it, it will not happen.

Anything I could say here would just make a new sig line for you. Since I'm already represented there, I'll withold commentary.

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-- Every morning brings opportunity;
Each evening offers judgement. --

"This shows that most people's knowledge of history begins with their lifetime."

Great! You argree with me! This goes to show that as a conservative, one must rely upon themselves for success and not some future event (like maybe somehow working conditions get better in the future for somebody else). Pessimism reigns supreme when you are resigned to a life of low-pay painful toil with no end in sight, ay?

"When I had my development for sale, everyone wanted to know me. Now that I have sold it and have cash instead, I can't get my phone calls returned."

You must have had a sweet development for sale. Everyone didn't have cash, they were selling their houses and parlaying it to a new development, or getting loans once they had the down payment (all of their cash).

Real Estate was king in 1987 too. People pined for cash in 1990. Cash never goes out of style.

Yah...I was ecstatic that my home was appreciating at 20% per year, so I sold it -- huge profits -- and then was dismayed to find that everyone else's house was appreciating that fast as well, so the bigger/better house was proportionately just as far away as it had been 5 years ago. Oh well.

Anything I could say here would just make a new sig line for you.

Hey, you can never have enough positives on a sig line.

Notice, how I've never put any of the not so positive comments there, probably because they wouldn't fit on one page. I prefer to live in my own reality.

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You sir, are my new hero! - Trifan 11/13/2008

Casey, you are a wise man - blueraider_mike 11/13/2008

Casey, This is an astute observation. - Slowbern 11/17/2008

As quoted above, but I guess I will have to repeat myself:

"The real gains for families have been in the value of their assets. In 2005 Americans owned an all-time high level of wealth (mostly housing and stocks), valued at $50 trillion, according to the Federal Reserve (see chart). Median household net worth is now estimated at more than $100,000. Rather than being overloaded with credit card bills, the truth is that Americans' assets are rising in value faster than they are taking on debt."

No amount of rising income or wealth can prevent people from living beyond their means and subject to bankruptcy.

At least in Florida, don't know about the rest of the country, home equity is retained through the bankruptcy proceedings in most cases.

Very balanced presentation, but such presentations are no fun. Way too boring.

Aren't the Blue States the ones with the highest income?

That fits a description of Illinois. Reliant on property tax. Taxes on groceries, gas, and other items where the lower economic classes pay a greater percentage of their income. School funding reliant on property taxes.

I'm not that old, but I remember a time when the yuppies were republicans (do they still say 'yuppy'? I think I read that term in a Mad magazine one time). I also remember reading about this party, back in the 1960's or so, called the democratic party and suppossedly they represented people of color, low income people, etc. Is that party still around?

Seriously, when one looks at the demographics being "represented", you basically have "Republican Red" and "Republican Blue" if you use the old stand-by that republican = wealthy.

I'm not even sure anyone represents the lower economic folks anymore. Heck, do they still vote?

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-- Every morning brings opportunity;
Each evening offers judgement. --

If what you say is true, and it applies across economic boundaries, why is the bankruptcy rate going up? Glibly saying what you have said doesn't contradict the fact that huge numbers of people have liabilities exceeding their assets. By definition, these people's assets have not kept pace with their debts.

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"Go yell at an M&M"

Don't be so doom and gloom. If everyone just closed their eyes and clicked their heels together three times everything would be just perfect.

By definition, these people's assets have not kept pace with their debts.

Considering how most people buy things (of significant expense) --- on credit/loan --- it would only be surprising if people were not in debt.

The interest on what you pay back continually compiles so that by the time you pay something the purchase off it actually cost you between 2 and ten times what the "sticker price" was. Meanwhile, it likely depreciates very quickly (either from use or out of date technology). So, in the end, you're still paying for something you don't own or use.

IMO, that's why anything outside of house/car should be paid for in cash, otherwise you're just asking to be in debt (unless you are very strict in purchases and payments ... I don't know many that are).

IMO, one of the few realistic ways people can have their assets be more than their debt is to significantly increase the value of their property.

I highly doubt I know more than a handful of people that live within their means.

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-- Every morning brings opportunity;
Each evening offers judgement. --

"By definition, these people's assets have not kept pace with their debts."

Simply not true. There have been some reforms, but people with six and even seven figure equity in their homes declare bankruptcy all the time, especially here in Florida.

Bankruptcies are up simply because credit markets have become easier and easier to access. People use the credit and go bust. If those same people made twice as much money, lots of them would spend all of that and go bust anyway.

Bankruptcy rates are a better barometer of social rather than economic conditions.