Fed Report: Net Worth of Americans Sinks 17.9%
I never had anything to begin with, and I can't tell you how strange it feels to watch all my friends free-falling down to my level:
WASHINGTON — Americans' net worth plunged a record 17.9% in 2008 as the value of their homes, stocks and other assets dropped swiftly, the Federal Reserve said Thursday in a report that did not bode well for consumer spending and the overall economy this year.
With net worth dropping so much, consumers are likely to focus on saving, not spending, as they realize they can't rely on their homes and stock portfolios as ever-rising sources of income, says RDQ Economics senior economist Conrad DeQuadros.
Such saving, while good in the long run, will likely prolong the economic slump. Consumer spending drives more than two-thirds of U.S. economic activity.
"This does point to further weakness in consumer spending going forward," DeQuadros says.
"I was confident before that I was doing fairly well," says Sullivan of Venice, Fla. But, "I have no chance at all of recouping the money by the time I need it."
U.S. net worth, a measure of households' assets minus their liabilities, such as debt, was $51.5 trillion in 2008, the lowest since 2003. The record annual drop in net worth, the first since 2002, accelerated as the year progressed. In the fourth quarter, household net worth dropped 9%, the biggest decline since quarterly records began in 1951, the Fed said.
Other details from the report:
• The value of household real estate fell for a second-consecutive year in 2008, declining 10.5%, the biggest drop on record. At $18.3 trillion, the total value of U.S. homes was the lowest in five years.
• Stock market wealth plunged a record 39.9% in 2008 to $5.5 trillion, the lowest since 1996.
• Corporate profits fell 10.8% in the September-December quarter and were down 8.8% for the year as a whole.
Some of this money never existed, except as a line up, then down on a graph.
A great portion did exist because people paid it, such as in mortgages, or institutional investments of retirement funds, it is a pity.
For the Capitalists, per se, that is what taking risks is about. Better luck next time, the Casino is rigged.
For the Fat Cats who lost money but we the peons are making it up to them, that is what I denounce the most. It is the greatest transfer of wealth in history.
It is a swindle.
People of the future are being impoverished for them.
The poor keep getting poorer, the middle class is being destroyed and the Fat Cats will do fine, thank you very much.
statusquObama, change you can only pretend in
A lot of the pearl-clutching and fainting spells among the rich can be summed up, 'My imaginary money isn't worth as much as I imagined!'
As for 'poor getting poorer,' let's remember what George W. Bush said:
"We want to help people get from the lower class to the middle class, and the middle class to stay there."
Wouldn't want the common folk to gain entrance to our privileged communities like Preston Hollow.
Back during the tech-boom some buddies were talking about how much they were making in the stock market then got totally wiped out in the bust. I said back then "the great thing about being broke is no matter how much the economy sucks, you're still broke."
Hopefully humanity will one day learn to be humane.
URGENT! Go to this MSNBC poll and vote on Obama's progress.
Repukes are flooding it with "F" votes.
Vote now and send it to everyone you know! We're "onto their game" and will beat them at it, as we do every time.
http://www.msnbc.msn.com/id/29493093/
It's going viral because I've received this link from several sources who are "fed up" with these sleazeballs wishing this country to fail.
Voted a "B" - since Geitner is a total waste of space so far (in his defense, he's under-staffed which doesn't help), and on many things he seems to be wobbling about a lot (Pakistan & Afghanistan policy foremost). Still early on though so I'm giving him the benefit of the doubt.
Hopefully humanity will one day learn to be humane.
..."a waste of space" as you put it.
He's more like a...
"watchdog in a sausage factory" (if you ask me)!!!
and I think he is having staffing problems because all the nominees have tax "issues" very similar to Geithnerman Pinscher himself!
audit-prosecute-incarcerate
That's all? We're only down 17.9%? Sure seems like a lot more than that. This pig has no basement.
I had very little in my 401k. And yes, I know the purpose of the plan was for long-term savings, but, being unemployed for 4 months (quitting was not the brightest move of my life), I've had to cash out part of it (last year), and roll the rest over to an IRA today. After the 20% penalties for withdrawal, and the taxes that I'll owe for last years cash-out and this years eventual withdrawal (in order to survive), I'll probably have to save at least $500 to $600 a month when I do get a job just to pay the taxes next year - the amount I just put in the IRA will help me pay what I owe for last year.
In other words, it'll end up costing me more in the long-run than what I had in the account.
Ain't dat a kick in da head! HA! :-)
...you had bought some gold or silver coin huh?...
Too bad your 401-k wasnt totally comprised of Halliburton and Raytheon stock huh?
audit-prosecute-incarcerate
converted defined-benefit pension plans to 401k accounts - to shift the risk to the employees when the stock market went down. And, this seems to have been particularly egregious, as I believe they were just planning/engineering this current "economic shock" to commit the greatest heist (or as some call it, "transfer of wealth") in the last millennium.
"Egotism is the anesthetic that dulls the pain of Stupidity" - Frank Leahy
For years, people kept telling me to invest my money, buy 401K's or mutual funds or whatever that week's thing was. I always refused, smelling a rat.
I am SO GLAD I didn't listen to them.
There's always free cheddar in the mousetrap, baby. - Tom Waits
here. I never trusted 401k's and always hated banks. After a layoff in 2003, my world was wiped out (didn't have much in the 401k at the time so not much to lose). After getting back on my feet, realized bush was going to totally screw the country with the home mortgage insanity. Houses that cost $180k and up when a person makes less than 1/2 or 1/3 of the cost is insane unless daddy gives you $100k as a down payment.
So very nominal amounts went into ultraconservative funds in my 401k to give the illusion to my employer that I believe in the system and tell people "I'm putting money in my 401k". My real savings went into precious metals bullion which I hold (its heavy).
I warned everyone I knew and no one would listen to me...absolutely no one.
Then the bust happens, guess what neither my 401k nor my metals lost much value. Metals went down but have recovered to right where I bought them at and the 401k lost nothing at all. Now I get to listen to everyone moaning and groaning about their losses. Those people had a lot more money than I of course but still...I warned all of them and they wouldn't hear it.
Sometimes quitting your job is the right thing to do. I assume you had a reason. It's hard now, but if you were not happy, you're best not to work there. We have to stop focusing on money so much and consider other things in life. You get one shot-- only one.
Personally, I think about how will I see my own life when I'm on my deathbed. Will I be proud (contented), will I have regrets, will I feel it had meaning? Imagine your life flashing before you (as they say it does) and feeling it was all a sham, a waste, a cop out!!! That would be an eternity of pain in a just few moments. I don't want to go there.
Hope that helps.
far left loon >.<
hasn't been felt yet. Just you wait and see. If economists get their government spending blitz, be careful the stimulus you ask for. That knocking at the door, is Mr. Credit Card:
China ‘worried’ about U.S. Treasury holdings
http://www.msnbc.msn.com/id/29675114/
Like you, I've not only never been in any way wealthy, I've also never understood the strange American drive to be wealthy, at any cost, even when the cost includes one's country, children, and future. What the hell possessed this nation for the past thirty years? How much fucking money do people NEED, anyway?
When I was growing up, the advice I heard was to save money, live within my means, and other such things. It may not have been the same for others, but in my family the kind of aspiration to ridiculous wealth that's common coin now (or was until a couple of months ago) would have been seen not only as arrogant, but deluded and dangerous. It seems we were right about that.
I've seen people who made no more money than I do (often less) load up with useless crap like iPods. I'm sorry, but $300 for a fucking WALKMAN? Are you KIDDING me? Especially on a credit card! That's the part that always puzzled me: people ruining their entire futures because they can't bring themselves off the plastic high long enough to realize the stupidity of their actions.
As bad as the situation is, in the long run it'll probably be a very good thing for America. There was no way that rollercoaster was going to last, and a hard crash is much better for teaching people a lesson than a slowdown, which probably wouldn't have done much to really change people's habits.
There's always free cheddar in the mousetrap, baby. - Tom Waits
as the nation survives it. Sometimes crashes are too much to overcome.
Whether America survives or not, done is done. Perhaps 50 years from now, the U.S. will not exist and we'll be a completely new country, who knows?
All I know is, there was no way we could continue the way we were going. It was insane, greedy and stupid ON ALL SIDES. One way or another, our asses were going to be handed to us. I'd rather we learn from the experience.
There's always free cheddar in the mousetrap, baby. - Tom Waits
The moral of the story?? Don't build your house of grass, when you should use bricks.
far left loon >.<
What? Loss of 10% corporate PROFITS? Oh, noes!! They are making less money and still not losing money. Horrible.
... because I've never been able to put anything aside in a 401K or into stocks or anything.
My home value is going down, but until the mortgage is paid off, I don't really own it anyways, it belongs to the bank.
And even then, if it is paid off, if I can't pay my property taxes, the government can take it away anyways.
I've never really counted on SS being there when the normal retirement date comes along, so I figure I'm in the work force until I drop.
So many of my friends and family have urged me over the years to be more financially responsible, work hard and save up for a pension, make some prudent investments, think about retirement, get a 401K. Don't do what I have done - live a somewhat nomadic, Bohemian life, travel, see things, experience life, be an artist and a writer. Because I'd end up with nothing.
They were, of course, completely right. I'm used to living close to the bone and surviving on thin air. But I'm also starting at a very, very late stage in life to think about what I'm going to live on in about 15 or 20 years, when it's not so easy for a woman past the age of 65 to survive on thin air anymore. But what THEY didn't realize is that being smart, and prudent, and financially responsible, and investing in 'safe' stocks and 401Ks, they, too, are having to worry, deeply, about what THEY are going to be able to live on in 15 or 20 years. Or even next year, some of them.
The only difference now between them and me is that I have better pictures in my photo albums.
It doesn't make me feel any better though. No, it makes me kind of angry. I deserve to struggle a bit now, because I've had a hell of a great life and je ne regrette rien. But friends and family, who have sacrificed so much to have a bit of security later? It's really not just. More than that, it was preventable, and that REALLY makes me mad. All those people cared and worried about me for so many years. Now I'm worried for them.
Strange how love and money works, innit?
The saying is that one can be young and poor but not old and poor.
I have explored the young and poor part thoroughly. I am now working on the old and poor part. There is something to the saying. I will keep you posted if I am able.
statusquObama, change you can only pretend in
I guess we are the fools at my house. we have lived frugally and saved for our retirement only to watch 40% of it disappear... I wish we had only lost 17%!!
Did corporations really lose wealth or is it just offshore in their secret accounts...
None
who had set up a fund with one years salary for my wife ($45K), himself and one other person. One year ago he moved it into a new fund to make more on the investment.
Last month we signed papers to get the money because he pulled it. At that time is was worth $12K. Today we had to sign new papers because the investment firm did not process his request. In one month is has gone to $10K.
He lost the most. His money tanked and he is now out of business.
Net worth. The household net worth estimates shown in this report are based on the sum of the market value of assets owned by every member of the household minus liabilities (secured or unsecured) owed by household members. The estimates represent the net worth of households at the end of the appropriate reference period. The net worth concept is based on the value of all assets minus all liabilities listed on page 5 (see box “Assets and Liabilities Included In Net Worth”). The major assets not covered in this report are equities in pension plans, the cash value of life insurance policies, and the value of home furnishings and jewelry. These items are not covered because it is particularly difficult to obtain reliable estimates of the value of these assets in a household survey. Meanwhile, have you heard about the couple Matthew and Laura Eaton who figured out a business they could run as a couple? While this notion might seem romantic to some, Matthew and Laura Eaton, bucking the traditional careers like becoming lawyers, real estate agents, or doctors, these two became professional shoplifters. Instead of getting personal loans and going to school to get careers, they steal from stores and then sell their ill gotten gains on eBay. They admitted as much to Dr. Phil, and then their house was raided by authorities to clear out any stolen goods. Personal loans would have been better for Matthew and Laura Eaton.
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