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

To: GraceZ who wrote (76797)	12/28/2006 2:54:36 PM
From: regli	Read Replies (2) \| Respond to of 110194

"... According to the University of Michigan study which tracked the fortunes of individuals over time, 3 out of 10 of those in the lowest quintile of earners made it to the top 20 percent of earners between 1975 and 1991. ..." Looking at this issue in context provides a much better picture as the following chart indicates when one compares the U.S. to "class conscious" European countries. cepr.net Social Mobility And here a few other interesting charts from that document: Prison Population Household Income Inequality

To: GraceZ who wrote (76797)	12/28/2006 4:16:53 PM
From: Mike Johnston	Read Replies (2) \| Respond to of 110194

Besides, you are ignoring the obvious, that being cash flow oriented hasn't hurt the collective balance sheets of Americans much in that total household net worth grew 2.5 trillion in the preceding year, easily dwarfing the growth in deficit you worry so much about. Welcome back, we missed you. So you think that if the Fed prints enough money every year to lift stocks and real estate values here by $2.5 T the $800B deficit doesn't matter ? What you call household wealth growth is really inflation. In fact the purchasing power of household net worth has gone down in terms of goods or services in recent years. By ignoring or misrepresenting inflation you are committing the fundamental mistake of economic analysis.

To: GraceZ who wrote (76797)	12/28/2006 9:36:49 PM
From: GST	Read Replies (5) \| Respond to of 110194

My main thrust stands -- Americans approach life as a cash flow proposition -- how much does a house cost? It is a matter of the monthly payments. How much does a car cost? It is a matter of monthly payments. You would probably not recognize life in a society where people buy almost everything for cash -- little or no credit. We base many of our most important economic decisions by asking how much it will cost in monthly payments -- we are indeed a "cash flow society". We don't save -- we make payments. A house fits in well for many people because it fits with our cash flow logic. Even when we save we are likely to view our savings as one of many monthly payments. Contrast our behavior with China where people -- including rich and poor -- save over 40% of their incomes. Asians look at their balance sheets and pay cash when they do buy. How many people in the US pay cash for a car? For us, it is a matter of managing cash flow -- so long as we have access to credit, it is all a matter of how much debt we can service. I am not in favor of it -- I am merely pointing out the remarkable extent to which it is true. Education and hard work can indeed take people from poverty -- and those who did it the hard way may well be more inclined to save -- my point actually. But underneath our economy lies the logic of next months bills -- making the payments. We are devastated when we lose our jobs because we will lose everything we borrowed to buy.