According to this Motley Fool, people are just plain crazy. Or maybe they are slow. I mean, people aren't really making much more money from their jobs than they were a few years ago, they pay a huge percentage of their wages to service debt, savings is now negative.... I guess you would have to be optimistic to behave in this way.I feel like we are at that point on a roller coaster ride in the dark where you just finished zooming up a hill and are hanging weightless, feeling giddy, not sure if the gears will kick in and ratchet you higher still but in the back of your mind you fear there is one heck of a drop just ahead. Or how about this image: we're balanced on the edge of a knife; one seemingly innocuous event could be all it takes to send us over the edge.
So why do you think people are so optimistic?
Also, is Marin immune? Does it have good reason to be this optimistic? I know there are some very wealthy folks here and some folks who make a lot in wages, but it seems to me after reviewing the census data that most Marinites earn a meager living compared to those few just mentioned. And what about all those first-time buyers in Marin? Share your thoughts.
Some choice quotes:
Today, the Conference Board said that Americans were more optimistic about the economy in January than they have been for more than three years.
What's so crazy about that? Well, just try and square it with the reality about what's happening to the American pocketbook.
We found out yesterday that in 2005, for the first time since the Great Depression, Americans spent more money than they earned for an entire year.
This morning, we discovered that in 2005, real wages decreased. For the first time since 1996, wages increased by an amount that failed to cover inflation. (It's sad to note that, in light of those wage figures, the Conference Board's survey shows that 21% of Americans believe their income will increase in the months ahead.) Yet consumers are convinced we're in the best of times, and they're willing to bet money (that they don't seem to have) on that belief?
Hey, I don't understand it either.
What I do understand is that things can't continue this way forever. For quite a while, American shopping seems to have been fueled by speculative gains on real estate-swapping, as well as that related trick, an "equity" loan taken out and spent on stuff -- the incredible live-in ATM.
But in the absence of real wage growth, how much longer will these good times roll? The housing bubble -- which the "where's my 6%?" home-selling industry used to take such pains to deny -- is already starting to hiss, making it increasingly likely that "mass affluent" Americans may have their mass and affluence handed to them by falling home prices.
4 comments:
Part of being an American is to be optimistic, unless you're a democrat (just kidding, sorta). There's also a certain Marin mindset (common in other affluent communities) that makes it gauche to talk directly about money since it's something you're supposed to have to live here. But the numbers don't lie. Marin residents may make more, but I'd be surprised if the average Marinite has more in disposeable income than the average American, especially those that are recent homeowners here. It would be interesting to what the average Marin homeowner's financial statements look like.
This country has lost its collective mind and is appallingly deficient in basic math skills.
Or maybe we have had it too good/easy for too long.
I had a former girlfriend that was a loan officer here in marin. About a decade ago. She was routinely amazed at some of the professionals (dentists, accounts, small business owners) that she would see that has astoundingly bad personal balance sheets.
We are talking about dentists reporting $300k in income, with another $300k in revolving debt and no personal assets. Typically, these people would be living in $1M houses (sorta expensive at the time), with $950,000 in mortgage debt (again, in 1993). Of course, they took nice vacations and drove 2 new BMWs, so everything looked nice. Many had plastic surgery debts.
This same pattern was repeated again and again. Always, judging from the outside, you would think these people were pillars of the community. But they were really debt fiends.
She just worked at a regular marin county bank. These weren't even especially distressed debtors.
Thanks for that, palladium. This is what I was getting at, and have sort of suspected ie Marin is full of people with high incomes living in expensive homes that might not have a lot of net worth outside their home because that home takes up so much of their income.
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