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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory -- Ignore unavailable to you. Want to Upgrade?

To: KyrosL who wrote (76499)	12/23/2006 12:52:07 PM
From: GST	Respond to of 110194

Fascinating.

To: KyrosL who wrote (76499)	12/23/2006 1:20:17 PM
From: russwinter	Read Replies (4) \| Respond to of 110194

This GaveKal crock about household net worth is pure unadulterated and outrageous crap. Now I'm going to have to write another blog exposing it over the holiday. In the meanwhile for starters, here are the facts using 2004 data (much more unequal now) from the Economic Policy Institute. stateofworkingamerica.org And the Fed data: federalreserve.gov First Gavekal claims US households hold $54 trillion in net worth. The asset side of ledger is supposedly $67 trillion. I say supposedly, because the Fed claims real estate is $22.4 trillion now versus $20.6 trillion yoy. Anybody paying any attention at all knows prices aren't up 8.7% in the last year, nor has anything close to 8.7% been added to the housing stock. The larger point is who owns these assets? Financial assets (including pensions) are valued at $40.5 trillion (see Fed data)as of 3Q, 2006. The top 1% plutocrats hold 36.9% (based on EPI's probably now too low 2004 data) of all common stock, or $14.95 trillion. The next 4% Bully class holds 28.4% or $11.6 trillion. In total the top 10% Bully class in America holds 78.8% or $31.9 trillion. The bottom 80% and growing Brazil America class holds 9.4%, or only $3.8 trillion, and that's AFTER a four year bull market, whoppie! The bottom 60% hold 2.3%, or less than a trillion. Again, this includes pensions, and we know what's happened to them in the last three years! It is very unlikely the bottom 80% still holds 9.4% of financial assets today. That's for openers, I will go over other asset class like real estate, and then liabilities later, but help yourself beforehand. The real picture isn't even remotely what GaveKal paints. Essentially if you factor in last year's 5-10% drop in housing prices, and the additional debt taken on since 2004, the bottom 2/3 of American society have next to nothing in net worth. And what do the "financial assets" that the Bully class holds consist of? Beside corporate stock, there are a bunch of claims on the debts owed by the bottom 80%. Platform that!

To: KyrosL who wrote (76499)	12/23/2006 1:48:29 PM
From: JohnM	Read Replies (1) \| Respond to of 110194

Welcome to Sizzle Inc. By JONATHAN R. LAING Interesting piece. A bit too pollyanna for my tastes but the argument gets me thinking.

To: KyrosL who wrote (76499)	12/23/2006 6:46:56 PM
From: NOW	Respond to of 110194

he adds lots of caveats there in brief mention at the end, any one of which is not unlikely to happen...as if to cover his ass down the road when his predictions are found to be utterly without merit... but his arguments are well worth listening to nevertheless...they do a fine job

To: KyrosL who wrote (76499)	12/23/2006 7:54:03 PM
From: Mike Johnston	Respond to of 110194

So the Chinese agree to toil long hours for low wages, slim profit margins, low return on capital, they accept all the cyclicality and capital spending risk, inventory risk and must carry a heavy financial burden involved in manufacturing not to mention pollution and health effects. And they do it all for IOU's which the US can print at will for nothing. All this, while the US platform company/economy enjoys high wages for clean and easy work, high profits, clean environment, high return on capital, with no financial, inventory and cyclicality risk and no requirement for heavy capital spending. What an arrangement. The US is getting something for nothing. But i have an impression that this arrangement is not going to last for much longer. It will end when the Chinese discover that they have been getting nothing for something.

To: KyrosL who wrote (76499)	12/26/2006 9:12:00 AM
From: Les H	Read Replies (1) \| Respond to of 110194

"A large tax boost or monetary-policy mistake could threaten GaveKal's scenario, too. And, of course, a major war could imperil the huge U.S. global asset base so painfully accumulated since World War II." Typical Republican position for the private sector to take credit for the federal government's Keynesian policies and then lay the blame for business failures with government policies. A major war is the boost to the economy.