Student debt becoming a larger albatross for economic growth: $1.2 trillion in student debt is outstanding and many college graduates working in jobs that don’t require their degree.
There was a time when going to college made sense in every feasible way. It made sense professionally, economically, and many college graduates have a wonderful time in the process of completing their degrees. Most would argue that learning is vital in growing and moving forward. Yet students need to ask whether their return on investment is really worth it? Many people go to college in a compulsory fashion. This is simply the next step after high school. This was an easy decision to make during a time when the costs of going to college were affordable. Today, many schools charge $40,000 and $50,000 per year for a basic undergraduate degree. That is problematic. A large number of recent graduates are now working in positions that don’t require their specific field of study. In other words, they are employed in a field different from their undergraduate degree but still carry forward with mounds of debt. The total student debt market is now well over $1.2 trillion. It might be worth it to take a course in Student Debt 101.
A day of reckoning has arrived to retiring Americans: 63 percent of Americans that start working by the age of 25 will be dependent on Social Security, relatives, or charity by the time they hit 65.
The notion of retirement is a fairly new one outside of wealthy circles. For most of civilized history, people worked until they died. Not a glamorous way to go but that is simply the course of human history. Only until recently with the emergence of the middle class was there a general semblance that retirement may be accessible to all. However looking at actual figures reflects a very different picture. It is hard to get a perfect balance sheet as to where older Americans stand today since there are many differing resources floating out in the market. Yet one thing is consistent and that is, older Americans are entering into a major day of reckoning with not enough. Older Americans are woefully unprepared for what lies ahead in retirement. Many are basically at the mercy of Social Security, family, or charity. Not exactly the retirement paradise Wall Street started pitching to the masses starting early in the 1980s. The reason this has gone on for so long is the political system is co-opted by big money. Over this period of time real substantive reforms could have occurred. Instead a generation has passed and many have nothing to show for it even with the stock market at record highs.
New definition of retirement = work until you die: Half of Americans have little to no savings for what will likely be a long and drawn out retirement.
The ideal vision of retirement is one of constant leisure supported by a sizable nest egg. Building a nest egg takes decades of discipline and careful planning. Unfortunately, many Americans did not adequately prepare and combined with the casino like financial system, many have been washed out of the system. Many retiring baby boomers are going to use Social Security as their primary crutch for retirement income. The Social Security system was never designed to be the primary target for retirement income yet this is what we are facing. The problem of course is that Americans simply do not have much sizable wealth in stocks and bonds. While the majority of Americans own houses, most own very little to no stocks. This is why the current record in the stock market means little in the face of an imminent retirement. Also, the one vehicle to build net worth in housing is largely locking out young future buyers thanks to massive buying from Wall Street and big investors nearly guaranteeing another retirement disaster after this one. One crisis at a time. So why will so many Americans be in dire financial situations as they enter their golden years?
China’s housing correction is now in full swing: Big developers begin to slash prices with sales falling more than 10 percent.
It was bound to happen. The housing correction in China is now here. It is interesting to hear the various perspectives from people and how China is absolutely different to the point of never being open to property bubbles. The same arguments were made during the Japanese real estate bubble as well. Well apparently the laws of math apply to most countries around the world and unfold on their own timelines. The typical price for a new home in China fell yet again for a third straight month with property developers cutting prices. The government has intervened to quell the fires of a bubble but at this point, it is already too late. The correction will occur. The bigger question will be how deep will the correction be? When bubbles occur, entire systems are built around the inflated prices as if they were only set to stay high. They rarely factor in a reversal. Perceptions will drive future home purchases and do people want to buy an asset that suddenly is starting to fall? The argument goes that many people put massive down payments in China so therefore, things will be okay. Okay in what respect? Instead of using money that is borrowed, people are using their own hard cash. So the burden is shifted to the public versus banks. As we know, many in China will funnel in life savings into a property just to purchase. In many respects, this will likely make buyers more cautious and impact sales harder. I’m not sure this is reason enough to justify permanently high prices and the current correction is a symptom of this perception.