From USA Today:
Wealth gap pits young versus old
Prashant Tungare arrived in the United States in 1984 with a wife, a child and $500 in his pocket. Today, the India-born American citizen is a prosperous computer specialist at Wachovia Bank.
“I’ve lived the American dream,” says Prashant, 55. He owns a 3,000-square-foot house in Charlotte and has enough money to retire, but loves his job too much to quit.
Tungare is part of the wealthiest generation in American history — a group of 67 million people 55 and older who are so affluent that the gap between them and younger people increasingly is making the United States a nation of haves and haves-much-less.
The growing divide between the rich and poor in America is more generation gap than class conflict, according to a USA TODAY analysis of federal government data. The rich “are”getting richer, but what’s received little attention is who these rich people are. Overwhelmingly, they’re older folks.
Nearly all additional wealth created in the U.S. since 1989 has gone to people 55 and older, according to Federal Reserve data. Wealth has doubled since 1989 in households headed by older Americans.
Not so for younger Americans. Households headed by people in their 20s, 30s and 40s have barely kept up with inflation or have fallen behind since 1989. People 35 to 50 actually have lost wealth since 1989 after adjusting for inflation, Fed data show.
Older people have always been wealthier than younger ones. What’s changed is the disparity between the generations. Old people have been racing ahead, helped by government retirement benefits. Young people are running in place, partly because they’re delaying careers to get more education.
…
Tinari also said that younger generations may be taking on higher levels of debt than older generations, which would affect their net worth.“There are not only mortgage loans but equity and school loans, increased use of automobile loans and people borrow on their credit cards for a wide variety of purposes,” he said.
The growing gap between rich and poor has raised concerns about social justice, the fairness of the tax system and other issues. Congressional Democrats, Federal Reserve Chairman Ben Bernanke and President Bush have expressed concerns about economic inequality, although there is no consensus about what, if anything, should be done.
…
The inequality debate has focused mostly on the super-rich, who have been getting super-richer. The top-earning 1 percent of taxpayers — those who make more than $310,000 annually – collected 17 percent of total income in 2005, up from 13 percent in 1989 and 8 percent in 1975, according to Internal Revenue Service data analyzed by economists Thomas Piketty at the Paris School of Economics and Emmanuel Saez of the University of California, Berkeley.
…
Trends for younger people have gone in the opposite direction. Mortgage debt peaks for people in their late 30s, the same time they have the most kids at home. About 11 percent are at least 60 days behind paying on some debt.Younger generations now delay the start of wealth accumulation. They postpone careers to get more education. They marry later (delaying the financial benefit of a shared household), have children later (delaying the arrival of lower-cost, kid-free days) and inherit money later (their parents live longer).
Younger people may not look poor. They have more stuff than ever – more valuable houses, cars and other assets. But they are so much deeper in debt than their parents – student loans, credit cards, mortgages, car loans – that their net worth has shriveled.
What’s not clear is whether today’s younger people will catch up. Will they reap financial rewards late in life as their parents did?
“Young people have a great future ahead of them, but the rules of wealth creation have changed,” says economist Kay Strong of Bowling Green State University in Ohio. She says young people will have to work longer and switch jobs more often than their parents for financial success.
“The baby boomers were the last generation able to ride the old industrial economy that let you hold one job for a long time and retire with a pension,” says Strong, 54. “The new economy is going to require people to adapt, hold more jobs over a lifetime and give up the concept that you will retire at 62.”
From MarketWatch:
Lowe’s net down 12% on housing market, previous hurricanes
Lowe’s said first-quarter profit declined 12% to $739 million, or 48 cents a share, from $841 million, or 53 cents a share. Sales rose 2% to $12.17 billion from $11.92 billion, with comparable-store sales down 6%. The home improvement retailer blamed a difficult housing market, tough comparisons to hurricane rebuilding efforts and significant lumber and plywood price deflation.
From Forbes:
OECD sees risk from excess liquidity but says desynchronised growth helping mkts
The pick up in economic growth in the rest of the world at a time when the US is experiencing a slowdown is shoring up confidence in financial markets but excess liquidity remains a key risk, the OECD said.
‘The world economy is quite desynchronised at present. The US slowing is being offset by stronger momentum in Europe and very strong growth in emerging markets, led by China and India. Even in Japan, which continues to lag, the news is not all bad,’ the OECD reported.
…
One, that monetary policy has done such a good job in keeping economic volatility low that it has managed to prevent the build up of asset bubbles. In this case ‘the outlook justifies some exuberance.’
On the other hand, excess liquidity is seen moving around from one market to the next — first real estate prices and now into equities. Eventually, the cost of capital will rise, in turn weighing down on asset prices. ‘Some levered players will be at risk in such a scenario.’
The OECD pointed out that the rally in equity markets comes so closely on the heels of the housing boom-bust in the US and that share price gains are being driven in part by the ready availability of liquidity
** Repost**
I am reposting this because I was unable to post until late last night.
To whomever asked about Open House:
I did an open house today, It went fairly well in comparison to the last couple I had w/1 or no attendees, We had five families/couples visit (4) not interested in that home, -over their price range- but all very interested in finding a home – very activly shopping. The 5th couple was’nt interested in the house at all, they came intent on helping a local cause. They bought raffle tickets for a new car. I hope they win.
Thank you, BC Bob, fellow blogger,& townie.
KL
also from the article:
“Social Security and Medicare increasingly are functioning as a transfer of money from less affluent young people to much wealthier older people.
Because the older generation hasn’t set aside enough money to cover promised government benefits, young people will have to make up the difference or older people will face benefit cuts. The financial shortfalls of Social Security and Medicare over the next 75 years are so large — $340,000 per household — that they dwarf the wealth of every age group. This hidden debt will make it a challenge for young people to accumulate as much wealth late in life as their parents have.”
From the AP:
Economists Foresee Sluggish 2007 Growth
Weighed down by a housing slump, the economy in 2007 will log its most sluggish growth in five years. But that showing should not cause businesses to really clamp down on hiring, economic forecasters say.
forecast released Monday by the National Association for Business Economics puts the growth of the gross domestic product at 2.2 percent for this year. The rate was 2.7 percent in the group’s previous survey, in February.
If the latest prediction proves correct, the growth rate would be the weakest since 2002. Back then, the fragile economy was emerging from a recession and grew by just 1.6 percent.
“The expansion has descended from its cruising altitude,” said the association’s president, Carl Tannenbaum, chief economist at LaSalle Bank.
The main culprit is the sour housing market. It fell into a slump last year after a five-year boom. Nearly half of the forecasters think the market will not reach its bottom until this winter or later.
Even so, the employment climate should continue to weather the fallout from the housing slump, the forecasters said.
Skeptic,
I hope that by saying Social Security and Medicare you realize you mean Medicare.
The constant conflating of the two programs has become so routine that people either think they are the same (and they are not) or they are being intentionally dishonest.
Social Security is not a program presenting significant challenges to fund, the adjustments to keep it in place as is for the next 75 years are relatively minor, particularly if we were to take action in the next few years or so.
#6
Whether one or the other is relatively easier to “fix” is not really the issue, as far as I’m concerned.
The question is why should current, productive workers be taxed in a highly regressive way to fund the leisure of senior citizens, many of whom are (A) capable of working themselves, and (b) are rich enough that they shouldn’t be getting checks from the government.
While at an Open House last year, the long-time owner actually asked me “How do people afford houses at these prices today?”
I told him: Suicide loans and the hope that “home prices always go up.” He nodded, and went inside.
Also from the article:
Gary Burtless, a scholar at the Brookings Institution, says the richest and the poorest have improved their standing. The middle class, however, has lost ground, he says.
Along with:
…but the rules of wealth creation have changed,” says economist Kay Strong…“The baby boomers were the last generation able to ride the old industrial economy that let you hold one job for a long time and retire with a pension,”
It’s as if they can’t bring themselves to say the actual say something positive about unions. As if they are forbidden to speak positively of the word. From a purely balance of power perspective, it is undeniable that the presence of unions played a major role in growing the middle class.
We don’t need no stinkin’ PMI.. Mortgages as loss leaders?
From InvestmentNews.com:
BofA trims costly PMI; rivals may follow suit
Other banks may follow Bank of America Corp.’s decision this month to cut mortgage clients’ borrowing costs drastically, including waiving the requirement for private mortgage insurance, industry observers say.
…
BofA’s cost reductions were motivated in part by a desire to give bank financial advisers referrals in order to cross-sell investment and insurance offerings to new mortgage clients.
“When a customer has a mortgage with the bank, he typically buys five other products — so it’s a great way to build a relationship,” said Floyd Robinson, president of BofA’s consumer real estate business in Charlotte, N.C.
Wachovia Corp., also based in Charlotte, offers customers “a variety of pricing options that can affect their origination fee, rate and closing costs,” said spokesman John Vecchiarello. “If customers choose to pay a slightly higher rate, fees and costs can be absorbed or reduced.” Products that do not require mortgage insurance also are available, he added.
…
“It appears to me that BofA is using mortgages like a loss leader — similar to free checking,” said Mr. Wasserman. “They want to win market share, and they know that the best customer is an existing customer.”
BofA controls about 5% of the mortgage industry’s consumer market, and the bank’s executives noted that they would like at least to double that within three years.
…
The additional risk to the bank from waiving mortgage insurance is not significant — even though there are no plans to securitize the loans — given BofA’s size and scale, according to Mr. Robinson. Also, the bank’s underwriting standards are not being lowered, he added. People with credit scores that made them eligible only for subprime loans would probably not qualify, Mr. Robinson noted.
Just a quick question about cross-selling. Has anyone else been getting mortgage advertisements along with their brokerage statements?
I’ve got an account with Morgan Stanley, and I’ve gotten a mortgage insert in at least the last two statements.
A number of big brokerages have been scooping up the lenders, I’m wondering how many of these brokerages have been doing so to bring these cross sell opportunities in-house.
I’ve got two other active brokerage accounts, but no adverts through those channels.
jb
Continuing:
This may be my favorite part:
President Bush in January cited education’s role. “Income inequality is real; it’s been rising for more than 25 years,” [Hey, mark that down, Bush said something that was true… of course it couldn’t last] he said. “The reason is clear: We have an economy that increasingly rewards education.”
An assertion immediately disputed by:
So far, though, the return on education has paid off for older people, but not for younger generations.
So education really isn’t the key either. Actually, it is the key for staying in the middle class, not really expanding it.
The situation we have today is not hard to explain. There are millions of jobs that do not pay a wage that would support an individual, let alone a family.
Someone has to stock the shelves at Target, and man the counter at Burger King, but I can’t figure out how that person is supposed to support themselves on the wage they earn.
The really amazing thing is that the same people who don’t think that those workers should earn a living wage also don’t seem to understand that it is the substandard wage that leads to the creation of all kinds of welfare, healthcare and housing programs.
Real estate agent suggests her sellers offer to pay a year’s worth of association fees, annual property taxes, or closing costs. Her favorite tease to put in home listings: “Call for the latest juicy incentives.” The practice, which popped up last year as a way for builders to move unsold inventory, has now spread aggressively to the existing-home market..and it’s not just furniture…latest trend is cash enticements to the tune of tens of thousands of dollars…the incentives, which don’t figure into the national home-price data reported by industry groups, may be masking a steeper downturn..
http://www.businessweek.com/magazine/content/07_21/b4035055.htm?campaign_id=rss_magzn
That piece from BW is very interesting, a few more paragraphs:
Such a rise has serious implications. The incentives, which don’t figure into the national home-price data reported by industry groups, may be masking a steeper downturn. Fowler found that prices in D.C. fell by 0.2% over the past year if incentives were included, compared with a 0.7% rise if they weren’t.
Subsidies aren’t new. But the latest surge, fueled by the huge run in prices in recent years, may have legs. Given all the equity that sellers have built up–some $10.9 trillion, according to the Federal Reserve, vs. $7.8 trillion in 2002–they usually don’t mind forking over some of their gains to get the deal done. Buyers often find a subsidy more appealing than a lower price, since it means they don’t have to put up as much cash. “Part of it’s psychological, but part of it is financial,” says Fowler.
The most aggressive deals may be downright fraudulent. Lenders scrutinize transactions to make sure any cash subsidies go toward legitimate home expenses and aren’t a way for the buyer to avoid a required down payment. Generally, if the incentives top 6% of the purchase price, it’s a red flag. “These days you cannot get into a home unless you’re putting some money down, at least 10% for those with less-than-stellar credit,” says Frank McKenna, chief fraud strategist at BasePoint Analytics, which analyzes mortgage data. “If borrowers are subverting that by getting cash back from sellers, that’s when lenders consider it a misrepresentation or fraud.”
From Reuters:
Countrywide chief decries subprime regulation
Countrywide Financial Corp. Chief Executive Angelo Mozilo on Monday said regulation in the subprime mortgage industry will help crooks while hurting lenders and the housing market.
“It’s better for the crooks,” Mozilo told Reuters before speaking at a Mortgage Bankers Association conference in Manhattan. “It’s only the good people who have to comply. Regulation, in my opinion, has caused part of the problem. When they attacked the pay option and interest- only loans, that really put a dent in a lot of the product, which is perfectly good product.”
Mozilo also said current guidelines proposed by regulators will exacerbate problems in the housing market.
“The reason why people can’t sell their houses is there is no buyers around,” Mozilo said. “And there are no buyers around because they can’t get the financing.”
skep (7)-
Everything the government gets involved in ends badly. I’m 47, and since I was 25 years old, I’ve conducted my financial planning with the belief that all these entitlement programs will be tapped out, diminished to the point of insignificance or abolished once I reach “retirement age”.
Once the boomer generation begins to die off and their population decreases sufficiently, the political will of younger generations that have been bled dry will quickly truncate or abolish these silly programs.
Lindsey–
So what do you think the consequences would be of requiring that everyone be paid a “living wage?”
Wouldn’t businesses simply hire fewer workers? Wouldn’t they maybe raise prices? Would higher prices for everyday items offset any rise in income?
Would individuals be less inclined to invest in the U.S. given that businesses would not be free to hire at market rates?
Lindsey (9)-
And…unions have helped destroy the same middle class they helped create.
How so Clotpoll 18?
Where’s all the Yankee bashers this morning?
I find it amusing that incentives are catching on. I tried lowering my price ,adding cash for new appliances but nothing worked. took my home off the market last Sept.Relisted in March with a teaser I would pay one year property tax ( I raised my asking price by same ) I got a offer within a week and another full price soon after .sometimes marketing IS everything
Grim (11)-
The brokerages and I-banks have their new mortgage divisions (some acuqired on the serious cheap) and are flexing their muscles. This BoA thing with waiving PMI and portfolioing those mortgages is quite something.
The competition on seconds and HELOCs is heating up, too. I have two banks down to 6.72% on my HELOC, which was just recast at 7.25% five months ago. The funny thing is…they both approached me. I didn’t go shopping.
#16
the problem is that the boomers will remain the major political force for the next 20-30 years. there is no incentive for them to control gov’t spending. Massive tax increases on the working population seem far more likely than any benefit cuts.
metro (19)-
Look no further than Daimler-Chrysler. Unions wouldn’t budge an inch, even though Detroit & the whole industry are dying.
Now, a private equity firm (Cerberus) will surely break the union, cut employment, bust the company into smithereens and sell off the parts.
mattingly (20)-
Right here, anytime you wanna talk baseball. Three more nights of misery on tap for you, starting tonight.
I could develop a shred of respect for your team if one- just ONE- of your pitchers would knock Ortiz off the plate.
The guy practically digs a trench with his back foot every single AB vs. the Yanks.
Why is it that Mets fans are more concerned with what the Yankees are doing than by just appreciating their own team? The Mets (even though I’m not a fan) are a young, great team with one of the most exciting players to come along in years (Jose Reyes)) and yet all you fans can talk about is the Yankees being in a slump. They were this far behind the past two seasons and still came back to win the division… their injuries will heal and they’ll do it again.
JB – great site. We were about to dive into a suicide loan in 2005 because we were scared to be “priced out” and I came along your site. Keep up the awesome work!
Regarding Ortiz… I seem to recall the Mets having quite a bit of trouble against the Red Sox last year. Aren’t you glad you’re not facing them this year?
Now, a private equity firm (Cerberus) will surely break the union, cut employment, bust the company into smithereens and sell off the parts.
This deal has me on the edge of my seat, unfortunately it’ll take years to play out. While Cerberus says they aren’t going to slice/dice Chrysler, I don’t see what the alternative would be. If Zetsche and Daimler couldn’t engineer a turnaround, I really don’t think that Cerberus are going to be able to do it. I wouldn’t put it past Cerberus to slice and sell some large portions of the business to Magna. I can also see an attempt to merge the finance arm of Chrysler with GMAC to try to exploit some synergies and reduce cost.
jb
Clotpoll,
I do not agree with you about the auto industry.
It is bad management that is killing it along with having to pay for health benefits unlike Detroit’s auto competition in Europe and Asia.
Also bad design (management’s fault)is part of the problem. Detroit has made alot of ugly cars over the last 3 decades.
Let’s look at groups of workers with high union membership…how are they doing? Well, the answer is “just great!” as long as you limit yourself to workers in the government employ. Private industry, not so well. The union model is obsolete. Aside from globalization pressures, the average blue collar worker carries so much debt that his employer is very happy to call his bluff when a strike is threatened. They know the average union member can afford to go out on strike for approximately 10 and a half minutes.
And union members are no less greedy than the other boomers. There have been plenty of “f— the new guy” union contracts negotiated over the last 10-15 years, where existing members load most of the wage and benefit concessions onto future workers. I guess that’s just the American way now. The unionist motto apparently is no longer “Solidarity!” it’s “I got mine!”
Oh yeah, I’m one of those GenX’ers that can see how badly I and my family will get screwed down the road.
#29 JB In my opinion the most valueable peice of Chrysler is Jeep, that is where they are going to try and mamximize their return, or sell it off.
As faras merging th efinance arem iwth GMAC, not General Motors would want it in this environment (slowing auto sales)
I agree if a firm like Daimler could not turn Chrysler around, I certainly do not see anybody else doing it.
From the WSJ:
Subprime Ills
Spur Remedy
From Lenders
By YOCHI J. DREAZEN and CHRISTOPHER CONKEY
May 21, 2007; Page A14
WASHINGTON — Five of the nation’s largest financial-service trade groups are wading into the political debate over the subprime-lending market, unveiling an array of policy proposals designed to stave off harder-hitting legislation.
The initiatives set to be released Monday by the Financial Services Roundtable, American Bankers Association and other groups represent the industry’s broadest effort yet to lay out its preferred solution to the crisis wracking the subprime-lending market. ..
The proposals call for lenders to verify that borrowers have the ability to repay their loans and to offer more assistance to homeowners facing foreclosure…
Three Democratic senators have introduced a bill that would make lenders liable for bad loans and provide some government funds to help borrowers avoid foreclosure. House Financial Services Committee Chairman Barney Frank (D., Mass.) is drafting a similar bill that he hopes to introduce this summer.
But with the Senate bill running into resistance from the mortgage industry, some lawmakers like Mr. Frank also are pursuing a second tack. Mr. Frank and his Senate counterpart, Connecticut Democrat Christopher Dodd, are pressing regulators and the mortgage industry to beef up standards for subprime loans without waiting for legislation.
New guidance from federal banking regulators is due out this summer. Mr. Dodd already has gotten major lenders to agree to help borrowers get out of bad loans.
Rapid adjustment in the subprime industry, with lenders going bankrupt and credit standards tightening, also is helping to curb some of the market’s excesses.
The trade-group proposals amount to an acknowledgment that the mortgage industry itself bears a measure of blame for the problems in the subprime market.
“Many companies made loans that with perfect hindsight we wish had not been made,” said Steve Bartlett, president of the Financial Services Roundtable. “The underlying motive was to increase home ownership, but mistakes were made on getting there.”
The initiatives, outlined in a joint statement from the five trade groups and a series of 14 specific policy proposals from the Financial Services Roundtable, are meant to shape any future legislation or regulatory moves by laying out the industry’s preferred solutions.
The proposals call for lenders to better disclose the costs and risks of subprime loans, restructure loans to help borrowers in the wake of interest-rate adjustments and expand the counseling and other industry-sponsored services available to borrowers facing the possibility of foreclosure.
Some of the proposals are likely to anger consumer advocates and watchdog groups. The trade groups’ call for a uniform national standard, for instance, is designed to pre-empt tougher state statutes. And the proposals make no mention of giving consumers the right to sue or seek arbitration in loan disputes.
The other three groups involved in the new proposals are the Mortgage Bankers Association, the Consumer Bankers Association and America’s Community Bankers.
http://online.wsj.com/article_print/SB117970249498808981.html
“I got a offer within a week and another full price soon after .sometimes marketing IS everything”
Nah, not marketing – you just found some morons who didn’t do their research.
Also bad design (management’s fault)is part of the problem. Detroit has made alot of ugly cars over the last 3 decades.
Too many marques, too many models, none of which are inspiring. Does Jeep really need 7 SUV lines? Aspen and Pacific (Crossover) bring that to 9, Nitro and Durango come bring the number to 11.
jb
It is bad management that is killing it along with having to pay for health benefits unlike Detroit’s auto competition in Europe and Asia.
This is exactly the problem with the unions. They want skin in the game during the fat times, “we contributed to this success and we deserve a piece of it”. Maybe so. However, when times are bad, it’s management’s fault, “they screwed up and it’s not coming from my check”.
It doesn’t matter whos fault it is. If the company is doing poorly, everyone has to tighten the belt to turn things around.
It doesn’t matter whos fault it is. If the company is doing poorly, everyone has to tighten the belt to turn things around……
I would agree whole heartedly with you if that was the case. However, in the case of the airline industry you had concessions given lately and management still taking bonuses while they were losing money. The reason given was that they needed incentives to turn the companies around. In other words screw the stockholders I am getting mine.
re: the wealth gap between old and young
I met a couple of friends of mine for a drink on Saturday night. We are all in our late 20s. They bought a condo in late 2005. They seem a little upset about it now. They didn’t get a suicide mortgage or anything– just bought the most they could afford with a regular fixed loan and downpayment they’d saved up post-college.
They said they thought they were doing the right thing at the time– that buying was something all financially responsible people strive for.
They said that when they were looking in late 2005, it was a huge shock as to what they could afford. They had thought that they were relatively successful. They came to the conclusion that most people in the area were making far more money than them (I’d guess they probably make in the $150,000 range combined).
I said, well, look around– there are lots of middle class people around here, and many of them live in single family homes. They said, yeah, but they’re all our parents age. The conclusion seemed to be that that era had passed– there is no way you could be middle class and hope to live in an actual house in this part of the world today.
As of now, this is absolutely correct. They are now thinking of how they can move to a diff’t region of the country.
I bring this story up because is seems illustrative of what happens when too much wealth flows to the old people in an area. Rather than stay and continue to play what they perceive as a game rigged against them, the young people just leave
Can anyone give me the estimated closing date on this listing: 2387941?
Thanks in advance,
AK
Too many marques, too many models, none of which are inspiring.
And how many low-cost high-fuel economy cars in it’s lineup? One, maybe two? Wonder how desirable those monster hemis are going to be with gas nearing $4.
jb
Estimated closing date is (or was) 5/15..
jb
Thanks! No info on the sale price yet?
AK
Does anybody have any feedback on Fanwood/Scotch Plains? The schools are good according to the NJMonthly, and I’ve noticed that houses there are 10% less expensive (cheap, my ass!) than Fair Lawn, which is the other place I’ve been considering. How would the commute be to lower Manhattan? Thanks.
“Someone has to stock the shelves at Target, and man the counter at Burger King, but I can’t figure out how that person is supposed to support themselves on the wage they earn.”
Just as there are “starter houses” there are “starter jobs” — and there should be starter jobs, I’ve had several.
But in this great country you can get a college education — via Federal loans and grants — and move up the ladder.
Making fries at Burger King is not a career, nor should it be.
From Reuters:
Countywide CEO sees housing slump lifting in mid-’08
Countrywide Financial Corp. CEO Angelo Mozilo said on Monday the U.S. housing slump could begin to lift by the middle of next year.
“You’re not going to see the light at the end of the tunnel, but we’ll be hearing a whistle,” said Mozilo, leader of the largest mortgage lender in the United States.
He added that he expects the housing market to settle down in the middle of 2008.
burst (31)-
GMAC is being sold to Cerberus.
OK the ultimate home equity loan has hit the market …..this surely means the bubble has exploded ?…..http://www.rex-inc.com/index.php
#37 skeptic: And that cannot be sustained, something has to change, and that means lower house prices.
Someone has to … man the counter at Burger King, but I can’t figure out how that person is supposed to support themselves on the wage they earn.
Does someone really need to man the counter at Burger King (or at any fast food store). Why exactly do we need these burger flippers?
If wages rise, the price of food at these institutions will rise as well. Personally, I believe the price elasticity of fast food is very high (my own opinion). As prices rise, these institutions will simply disappear. People eat here because it’s cheap, period.
The only benefit these institutions provide to local communities is jobs, we wouldn’t starve without them.
jb
Clot: All of GMAC is being sold to Cerebus? I though it was just peices of that business. I did not realize it was the entire outfit.
Can any expalin what’s going on here from looking at the tax info?
Deed $695,000 11/30/2005 XXX XXXXX
Mortgage $556,000 12/5/2005 SUNTRUST MTG INC
Mortgage $26,500 1/8/2007 FIRST HORIZON HM LN CORP
Mortgage $600,000 1/8/2007 FIRST HORIZON HM LN CORP
Purchased 11/2005 for $695,000
Listed 5/2007 for $739,000
My $0.02, a cash-out refi (which satisified the original $556k note) along with a HELOC.
jb
#46 mrb- that’s an interesting product. At a quick glance, if you own now, plan to sell in a few years and believe the market is going to drop, it’s a way to dump a portion of your potential loss in value to someone else.
There has to be a catch in the small print.
Can any expalin what’s going on here from looking at the tax info?
If there’s no DISsolution of mortgages between 11/30/2005 and 1/8/2007: TROUBLE
There’s a public record recorded when a loan is paid off (DISsolution).
-Richie
Thanks
To be clear: the UAW treated Chrysler differently than Ford & GM. Ford and GM were in trouble, so the UAW recognized the risk of their pensions and retiree healthcare benefits being renegotiated. In Daimler, the UAW assumed that they had a deep pocketed and unlimited supply of funds, so they held Daimler up. Little did they realize that they reap what they sow.
Unions? Go ask the people in the following U.S. industries what they think of Unions: steel, airlines, railroads, telecommunications.
You want the real villians?: any company that attempts to shirk its responsibility to provide appropriate healthcare benefits for its workers.
Why? Wellness programs and preventative healthcare is FAR more important and economically efficient than treating the sick and infirmed. People WILL be treated. Either Wal-Mart pays for it, or John Q. Public. Wal-Mart is ripping us off.
Rich,
Is that Morris?
jb
Richie,
The tax info is form the MLS show they may not show that info.
No, Bergen. MLS 2720345
And Richie, that for supposed to be ‘from’ not ‘form’.
Chi FI,
My sentiments exactly. That is why I think we will have nationalized health care soon. It takes 14% of GDP and it is horribly innefficient.
Me have REALLY good weekend,
now type like Tarzan.
Re: Jeep
Jeep is no longer what it once was. Bring back the Cherokee. The Jeep Patriot and Compass are jokes. Front wheel drive and 4 cyl. That is not a Jeep in my opinion.
Skeptic, post 7
First, the current workers are paying not just into a retirement plan, but into an insurance program. It’s not something you want to use, but I’m sure if you became disabled you would be grateful it exists.
Also, while:
many of whom are (A) capable of working themselves, and (b) are rich enough that they shouldn’t be getting checks from the government.
many are not, and even those who are comfortable do have some claim to recoup money they paid into the system. Eliminating or curtailing SS benefits to those who can do without them is certainly not something I find unreasonable, but then I don’t have to worry about those people voting against me.
At the end of the day though, the Medicare problem dwarfs the SS problem, yet all of the discussion seems to be about SS. As I said before, they are two different issues and it serves no honest purpose to discuss them together, but that is the way the conversation always goes. If it weren’t so important an issue it might be humorous, but as the discussion is now framed it is perverse and corrupting.
Concerning cars… I could never understand GM’s approach to Saturn. This is a brand that could be tweaked to compete with foreign models. While Chevy dealers gasp for air, Saturn shops appear to be few and far between.
As far as fast food. I think that more people eat it because it’s fast, not cheap. BK and MCD will not even consider a location without a drive thru. Truth be told, the American consumer would easily pay 20% to 30% more for lunch. They do it for coffee every day.
JB, why keep an account with Morgan Stanley? They screwed me on Intel years ago. I’ll never let it go.
http://biz.yahoo.com/ap/070521/oil_prices.html?.v=8
And the beat goes on….
the reason people harp on social security rather than medicare is because people feel badly for people who are sick, but not for old people who play golf and take cruises year round.
similarly, you probably won’t hear many object to social security functioning as an insurance program for the permanently disabled.
and no one has any claim to “recoup” what they paid in to the system, since the money goes right out the door as soon as it’s collected. this is not an account at a brokerage, it is a welfare plan, plain and simple. The only thing is, the majority of the money goes to people who are perfectly capable of surviving without it
Skeptic,
I have been railing on SS for years. An article I read years ago made the wild claim that if you randomly mailed out the checks it would reach more people in poverty than it does now.
#61 tbw They still make the Grand Cherokee.
Merrill definitely overpaid!! Even wall street firms follows the “me too” principal. Could have easily waited and purchased New Century or Option One who have servicing shops for a lot cheaper.
——————-
Last year, Merrill Lynch & Co. and Morgan Stanley bought subprime mortgage lenders, with Merrill paying $1.3 billion for First Franklin and Morgan Stanley acquiring Saxon Capital Inc. for $706 million….a mortgage-sector analyst estimates that the pace of subprime lending and the volume of securities backed by such loans may fall by nearly half this year….believes Merrill may have overpaid for First Franklin by $600 million. He doesn’t believe Morgan Stanley overpaid as much for Saxon because that business includes a mortgage-servicing platform, which he believes has held more of its value.
http://online.wsj.com/article/SB117953183168008179.html?mod=aol_wsj_hs&ru=aol
Skeptic, post 17
Of course prices would rise if people were paid a “living wage,” but the concept would provide greater balance in income distribution. Whatever system you have is going to influence income distribution. The one we have right now skews very heavily in favor of employers, particularly large corporations, essentially enabling them to push some of the costs for obtaining their workforce onto the rest of us. Wal-Mart wants a healthy workforce, but they force you to pay for their worker’s healthcare.
Businesses hire the number of workers they need. If wages doubled, they wouldn’t cut the workforce in half because they couldn’t get the job done. Prices would change, but more workers (and therefore more citizens) would likely be better off. Raising wages does not mean businesses still don’t have to compete, it just means they would be competing in a different arena and under different ground rules.
In general,workers in the rest of the first world have more rights than in the US, but people still invest in Germany and France. For all the talk of the dynamic economy in Ireland, the country’s social infrastructure is far more elaborate than ours with a far more aggressive tax system. Those countries seem to be faring quite a bit better in terms of their means of exchange with the US in recent years, so they seem to be out-competing us despite any advantages our system is providing.
Clotpoll, post 18
What’s your point?
Clot: All of GMAC is being sold to Cerebus? I though it was just peices of that business. I did not realize it was the entire outfit.
Cerberus acquired a 51% equity interest in GMAC.
Clot 24
So years of bad management, poorly designed and executed vehicles and plain old competition have nothing to do with the problems?
Apologies Metroplexual, post 29
I see you beat me to it.
I would also say that if companies are supposed to compete, you have to expect some to fail.
Lindsey,
I agree with skeptic, I don’t know why SS is treated as a given. It should be treated the same way as welfare, I do not have a problem contributing to SS and never having to use ( althought I probaly will), I am grateful I don’t need welfare ( I pay into of course) but when people like my uncle ( a hardworking multi-millionaire) is collecting these checks – something is wrong, yes I know he paid in, so give him what he paid, he’d be done already, this program was set up when people only lived to 65 not this 75-90 were paying now. Having been born at the end of this “Baby Boom” (1960)we get the real short end of the straw, Clot knows.
KL
#69
Prices would rise. Sales would decline due to external competition. Workforce would then shrink to the new number of employees needed.
More people would benefit. The majority of these people are not in the US.
No problem. It is nice to see that I am not the only one of this mind. You just about said everything I did. Too funny.
#69
Germany and France also have high structural unemployment and become giddy anytime they can manage to grow their GDP by 2% annually. France’s new president just won on a platform of making France’s economy more like the U.S.
Skeptic, post 37
What happened to your friends is they made a mistake. It’s not a crime and it’s not a sin, they just bought real estate at the top of the market. If they had been rash and bought the same place in 2002 or been more patient and got something even better in 2009, what would be their complaint.
The market is out of whack. Sooner or later things revert to the mean, and if your fortunate, you are prepared to buy when prices are good, or you educate yourself enough (far easier said than done, life keeps getting in the way) and act accordingly.
They can move. They might like it, they might not, but either way the “mistake” they made probably isn’t fatal, and maybe they learned something from it.
Skeptic,
We also have high unemployment. Since they started measuring it differently in the 80’s we have loss the true measure of the unemployed.
Our economy has been fueled primarily by HELOCs since 2001(MEW),now that the party is over we will see how strong the economy really is.
JB post 48
JB, somehow I doubt you spend much time or money at Burger King et. al., I know I don’t.
The point is, it’s a part of the system. If it went away tomorrow I doubt you or I would really notice, but the food still has to come from somewhere and the people whose hands it passes through have to get paid. BTW, your price elasticity may be very high when it comes to food, but there are plenty of others who aren’t in quite the same situation.
I don’t want this to devolve into a discussion on the horrendous food choices made by American consumers (particularly low-income ones) but the cost of food is a significant matter to an awful lot of people.
Once again apologies,
I see Chifi beat me to the Wal-Mart healthcare reference.
Incentives to sell a house are like the rebates the car manufacturers offer. Keep the list price high, add rebates, and hope the customers come in. Over time, people realize the gimmick, and the brand value is decimated due to the hammering the resale value takes.
Wonder why Honda never offers rebates? Because they know how to nurtur their brand, and you see it in their high resale value.
Saturn has a clear pricing, but other GM brands’ perception is fading with rebates everywhere, and so does pricing power eventually. Chrysler should go back to the drawing board and build engines that people need in a era of high gas prices. Even the 2.4L engine in the PT cruiser hogs gas.
While incentives will keep house prices (at least comps) up in the interim, eventually people will see through this and demand up front reductions in selling price.
Skeptic post 65
No, the reason people harp on SS is because it is always conflated with Medicare, despite the fact that the program is basically fiscally sound. It’s a bait and switch and you fall for it every time.
While you may feel no right to recoup what you paid into the system, I think there may be an awful lot of people who feel differently. You might want to ask around. It certainly is a welfare program (though I’m not sure that means what you think it means), and as you acknowledge an insurance program, but it does have a particular design and that includes designated revenue.
As far as who gets the majority of the SS money, and their lifestyle, I have no idea, and I suspect you don’t either.
If it went away tomorrow I doubt you or I would really notice, but the food still has to come from somewhere
Are you trying to say that fast food establishments provide some kind of social service by providing low cost food to the community?
jb
#78 They made a msitake, but the question is how long will it take to correct their maistake. Like I have always said, nobody wants to believ that they over paid for real esate. It can be psychologically devastating. much more so then “throwing you money away on rent”.
Lindsey,
I am not confusing anything. Social Security is mainly a wealth redistribution scheme from young to old. Period. The elderly dominate politics and that is why social security exists. It may be closer to solvency than medicare or Delphi– so what? Let’s judge it on its own merits and stop changing the subject.
Do you feel a right to recoup what you pay in tolls everytime you drive through the Holland Tunnel? Do you feel a right to recoup the cost of a gasoline tax every time you fill your car? Do you feel that you should get some food stamps because they are paid for by fed tax dollars? Do you see how nonsensical this sounds? Well social security is exactly the same and no one is owed a thing simply because they are taxed for it
Jumping into the wayback machine.
Clotpoll post 16.
Here’s something I can’t figure out.
Clot, you are clearly a pretty bright, honest and thoughtful guy, but you’re approach to government seems to be that of a smug 14-year- old.
I’m guessing you’ve been voting for the last 30 years and I get the feeling you’ve been much more “in opposition to,” one candidate as “in favor” of your choice.
I would imagine more often than not you’ve pulled the lever for Republicans in hopes of greater fiscal sanity and the belief that you are more likely get prudently responsible actions.
During that time they have actually been in the position to deliver on their announced agenda for some significant spans and have come through exactly never.
I’m not saying the Democrats are your answer, but don’t you think it might be time to take a more nuanced view?
Also, do you really want no government response to disasters like Hurricane Katrina? I’m serious about this question, because, while I don’t agree, I think it’s a reasonable position, but I am legitimately wondering if that’s where you stand.
Finally, I think you have to give the government some credit for a few successes. There was that WWII thing, the moon landing, and even bringing peace to Bosnia/Herzegovina if you’re looking for something more recent.
Not everything is Iraq the war on drugs or medicare.
I’ve got plenty of gripes about the way the government works and what I think are it’s failures, but I feel a little better about what we’re dealing with when I think the people in charge are actually trying.
Get your hand out of my wallet. I paid into the Social Security system and I expect to collect at the end when I am eligible. The way I see it YES it is a savings account, and I will take my measly benefit. I would rather not pay into Social Security and invest the money myself and generate some real returns for my golden days.
Take a close look at your pay stub and look what your partner/government is getting. It’s your money fight to keep it!
What a load of crap. God, how I hate these articles that try to lump groups of people into boxes. I am a 52-year-old web developer who lives in constant terror of losing my job, because NO ONE hires 52-year-old web developers. There are plenty of baby boomers who went into IT and found themselves suffering from the same outsourcing and corporate greed that younger people are suffering from now. This idea that all baby boomers are auto workers with fat pensions is ridiculous.
For all that we are painted in the media as being a self-involved generation, this idea that we lived in the lap of luxury and are now somehow sucking at the teat of government and stealing from younger people’s pockets is insulting.
I waited till I was 40 to buy a house because you had to put at least 10% down — and then you had to pay PMI till you built equity. I wasn’t able to put any money into retirement until I was in my 30’s because I wasn’t getting paid enough to support myself and save.
We weren’t raised in McMansions either, where every kid has his own bathroom and is issued a Lexus by mom and dad just for getting a good report card. My first car was a 10-year-old Dodge Dart that I bought the day of high school graduation.
That said, there are two areas where younger people have it tougher. One is college costs, because many of us were able to go to college without having the equivalent of a mortgage hanging over our heads when we got out. The other is housing costs. I was able to afford $300/month rent for a place by myself on a $12,500 salary in 1978. Now when rents are four times that and entry-level salaries aren’t, it’s a different story.
Skeptic, post 86
this discussion starts out with you posting:
“Social Security and Medicare increasingly are functioning as a transfer of money from less affluent young people to much wealthier older people… The financial shortfalls of Social Security and Medicare over the next 75 years are so large — $340,000 per household —
As I’ve said before,the trick here is the inclusion of Medicare. Give me the number without Medicare. I can promise you this, government spending on shoelaces and medicare are completely unsustainable for the next 75 years.
What’s the point of getting angry with me when I point out that someone else is trying to play you for a fool?
The merits of Social Security are writ large. It has been a tremendous safety net for millions of Americans and there’s no reason it can’t continue to be just that into the foreseeable future.
As to your absurd Holland Tunnel and Gasoline tax analogies, I do indeed recoup what I pay, I get to use the service I’m paying for (i.e. crossing into Manhattan or riding on nicely paved roads). I may disagree with the price, but that’s another matter isn’t it?
The taxes I pay for Food Stamps go to feed people far less fortunate than myself, and as a member of a civil society, I accept the charge. Once again, if it were up to me it might run a bit differently, but I get my chance to have a say in that every other November.
BTW, Social Security taxes are not the same as other taxes because we as a society have said they are not the same. You may not expect to receive benefits, but that doesn’t mean you don’t have a right to expect to receive benefits.
Finally, follow this link to get an understanding of where social security is today and where it is going. The piece is more than two years old, but the facts haven’t materially changed.
http://www.press.uchicago.edu/Misc/Chicago/035468oped.html
Skeptic,
You know, I didn’t want to make this personal, but there are a lot more Jills out there than most of the people who post here seem to recognize.
Maybe if you got out into the world a little more you might meet an 83-year-old woman living in public housing and surviving on her $228 social security check. I could introduce you if you like.
There are certainly people like KL’s uncle who don’t need the money, and I’d be more than willing to pull the plug on him and the rest of them, but he has every right to say he made a deal too, and we should honor it.
JB post 84,
No. I’m saying I don’t think you personally often eat at Burger King.
However you do eat, and it comes from somewhere, and people are part of the process that get it to you. Whether the last person in that line is behind a fastfood counter, a register at the supermarket, or coming out of the kitchen at Peter Luger, they deserve to be paid a fair wage.
THIS JUST IN!! HOUSING PRICES IN MY SUNDAY PAPER ARE STILL IN THE STRATOSPHERE!! THAT IS ALL!
i agree prices are still to high.’
what happened to the tax relief discussion
kind of dropped off. i guess the problem
is solved. Everyone get 20% relief,right?
“…they deserve to be paid a fair wage.”
I’m not so sure about that. I believe different tasks should warrant wages that are dictated by market forces, whether or not they are fair.
Lindsey,
I could list 100 things that I would like the gov’t to provide me with because of the taxes I pay. A poorly managed pension is not one of them, and I don’t recall bargaining to get this deal.
There is a huge difference between allowing for taking care of the sick and truly destitute and sending everyone with a shuffleboard cane a check. The latter is vote buying, plain and simple.
BuyNextYear Says:
May 21st, 2007 at 3:06 pm
“…they deserve to be paid a fair wage.”
I’m not so sure about that. I believe different tasks should warrant wages that are dictated by market forces, whether or not they are fair.
BNY: agreed – my only point of contention with Wal-Mart is the perceived free rider effect that helps to boost their own business results.
What “perceived”?
Skeptic,
There’s nothing wrong with disagreeing or trying to change the system, but there’s no reason to make false arguments about the situation.
Social Security as it is may not be ideal for everyone, but there are huge swaths of the population for which it has been a godsend.
Also, I doubt you were there when the Bill of Rights was written, but you must be glad you don’t have to fight to get those rights aren’t you?
BuyNextyear,
I don’t believe anyone thinks different tasks shouldn’t be compensated at different rates, but you really think it’s OK for a person to work a full-time job and not earn enough money to cover their basic needs of food and shelter?
Lindsey,
I am with you, as long as they are legal. My problem is the dilution of the entry level market. That is where I will likely have to pick up the difference when my girls go to work.
but you really think it’s OK for a person to work a full-time job and not earn enough money to cover their basic needs of food and shelter?
What kind of food? What kind of shelter?
“Basic needs” is a hard term to define.
metroplexual,
The question of illegals is entirely another matter and I’m not even sure you could find an insane person who would argue that they have been in any way beneficial to
existing working class Americans.
There is no doubt that immigrants, both legal and illegal, have been a big factor in driving down working class wages. In places like meat packing plants where they couldn’t export the jobs, they imported the workers. It’s not that Americans wouldn’t do the jobs, it’s that they wouldn’t do the job for the wage the company is willing to pay.
I’m sorry, but I don’t know what you mean by:
“pick up the difference when my girls go to work.”
I really don’t think “basic needs” is all that tough to define.
Housing: A sanitary, secure place to live with heat in the winter, electricity, and running water. A studio or 1br apt. for an individual would be fine.
Food: Vegetables, fruits, bread, some meat if that’s what you want. The stuff that you might call a balanced diet.
I’m willing to blow off all transportation costs, though that is a dubious move on my part, but I think it’s possible.
In Monmouth County where I live, that means an hourly wage of at least $12.
For the record, the estimate of the National Low Income Housing Coalition puts the wage needed to live in Monmouth County at $15.86 per hour.
I agree totally with Jill (#89).
And yes,people in their 50s in the corporate world routinely lose their jobs – they get laid off or forced out one way or another and then NO ONE wants to hire these “older” workers .
It is a nightmnare.
Don’t worry about social security. The solution is to monkey with the inflation numbers until your entitlement is worthless.
How many pensioners spend their money on ipods and flat screen tvs?
Slugs (102), I agree with Lindsey about basic needs. Furthermore, I suspect if we conducted an experiment where we took “basic needs” away from you, I don’t think you’d have too much trouble determining what’s missing.
Skep-tic & Lindsey,
Re: Medicare/SS debate. It’s interesting to me that the two of you are having this debate in the context of so many comparisons being made between current economic conditions and those just prior to the great depression. It was this major event that gave rise to SS in the first place. And it may take another such economic calamity for people to realize why it came into being in the first place.
Re: Medicare. One of the biggest costs that is currently crushing the system is the high (and climbing higher) cost of prescription drugs. And the Bush administration ensured that the government (Medicare) could not negotiate volume discounts with pharmaceutical companies the same way any other purchaser could. No wonder you can now see TV Advertisements paid for by PHARMA encouraging the public at large to not change a thing about the Medicare system.
Otherwise the Medicare system is very well run. It’s administrative costs are lower than any private insurer. And administrative costs are one of the biggest sources of waste in our health care system.
And while I’m on the subject of administrative waste, the big 3 automakers can only look at themselves (meaning the upper management) to determine why they are in the predicament they’re in. For years they’ve relied on the age-old strategy of manipulating the nationalism of the masses to maintain sales and high profits. Translation: “Buy American!” They have intentionally refused to be competitive and for a while their manipulations worked. Over time however, even John Q Sixpack can figure out that he’s getting screwed buying Chevy’s and goes out and buys a Honda or Toyota—after all, they’re the companies that are building plants (and creating jobs) here while the big 3 are closing them. And to top it off their cars last.
I come from an entire family of GM workers and everyone across the board complains of the multiple levels of administration within their facility. Meanwhile upper management continues to take huge salaries and bonuses while simultaneously complaining about health care and pension obligations, laying off workers and closing plants.
And what a coincidence, the big 3 is losing market share. The irony is that at least GM quality is improving. Ford has been a little better than GM for quite awhile, Chrysler? Well, perhaps the government shouldn’t have bothered to bail them out in the early 80s. They had a great opportunity with the Sebring redesign and they blew it.
Though I have to admit, the Sebring convertible is a fun car to drive.
“Corporate profits are at all time highs” but wages are not keeping up with inflation. Also, I don’t see many young people getting promoted around here…when there is an opening, they hire some hotshot MBA from outside the company to take the position, leaving us regular workers stuck in place. All while the executives vote themselves huge raises and bonuses and stock options.
Houston, we have a problem.
Did the hotshot MBA invest any money in their education? Are the regular workers taking measures to enhance their skills so they can compete with the newly minted MBAs?
If you work for a company that passes you over for a less qualified person who happens to have a degree, you don’t want to work for that company any longer. It will ultimately fail and/or succumb to competitors who recognize talent and grow said talent from within whenever possible.
Seneca @ 111 said:
“Did the hotshot MBA invest any money in their education? Are the regular workers taking measures to enhance their skills so they can compete with the newly minted MBAs?”
There is my point exactly. The boomers and all previous generations were able to move up in the company and grow wealth by growing their paycheck by being promoted. Internal workers who know the business, have made relationships internally & externally, and have requisite skills to become manager are being passed over for folks who learned how to be a manager from a textbook in B-School. Who was the genius who decided that the only skills needed to be a manager are learned in a classroom instead of actually out on the floor? It seems to coincide with timeline of the corporations’ lack of investment in its workforce. My parents both started out as telephone operators for AT&T, and dad retired after 27 years as a district manager. No college degree. Me, I left the company after 5 years because they would not even promote someone to assistant supervisor without some business credits.
Bruiser #112
“Me, I left the company after 5 years because they would not even promote someone to assistant supervisor without some business credits.”
And that is MY point exactly. I think leaving that company because you weren’t promoted without addtl biz credits was the right thing to do. Companies that choose not to promote from within, ever, will ultimately fail. I agree with you that there is nothing that can replace actual job experience, certainly not textbook learning.
The best companies try to promote from within and if graduate courses are a pre-req, they reimburse you for most if not all of the expense and its a win-win situation. Its not worth your time to work at companies that will only hire from the outside.
Realistically though, it happens all the time. Todays workplace ain’t our parents workplace. Most people I know have to change companies in order to get promotions and significant pay raises. Otherwise you will constantly hear the company line about needing to tighten the belt and thus, your are supposed to be happy with a 3-4% pay raise each year.
You want more? You have to make it happen for yourself. I think we need to encourage people to adapt to that situation rather than go back to the way it used to be. Never put your own chances for success in someone else’s hands.