Financial panic button for younger Americans – The sandwich generation saw a 59 percent decline to their net worth as they deal with college aged students living at home and elderly parents.
Unfortunately more data pointing to the deterioration of the middle class came out this week regarding net worth figures. One of the more ominous data points regarded the sandwich generation of those taking care of college aged kids and parents. The net worth figures this time released by the US Census coincide with the information released by the Federal Reserve. In short, American balance sheets are in a deep panic. Over 90 percent of Americans have been crushed through this recession if we examine net worth data. They have seen their wealth decline from a net worth perspective but also their incomes have fallen. Not the ideal sort of combination for economic prosperity. The information released is troubling but beyond that, it must serve as a push for a panic button to fight for the middle class. Whether people acknowledge or not, the middle class is being lost day by day.
The broken tassel of American higher education – College debt defaults bring up questions about repayment structure. Is college even worth the current costs?
As hundreds of thousands of young American enter the employment market with newly minted degrees, the clock begins to tick on those heavy student loans. The majority of student loans do not enter repayment until six months after graduation. Yet we are facing tectonic shifts in higher education. The cost of going to college, seemingly the only path to what remains of the middle class, has far outstripped any sensible measure of inflation. As young graduates leave school many are saddled with tens of thousands of dollars in debt and the reality is, many are entering a lower wage workforce where pensions are a thing of the past, healthcare is largely shouldered by employees, and employment security is nearly nonexistent. Keep in mind this is the market for recently minted graduates which are a small segment of our US population. There are countless horror stories of student debt including debt collectors going after parents of a deceased son. Welcome to college circa 2012.
The global addiction of central banking stimulus – Contagion spreads to Spain as 10-year edges to 7 percent. Life in a perpetual quantitative easing world.
Financial markets around the world are now desperately dependent on central bank stimulus. The US recovery is largely dependent on the Federal Reserve funneling loans into the system via the quantitative easing process and other archaic forms of money development. It is interesting how the Greek stock market rallied this week merely on the notion that pro-bailout parties will be elected and thus allows even more debt to be injected into the system. Yet this does not solve the core problem that too much debt is swimming in the system. Central banks do not create any real tangible product in the economy. They have the incredible power to inject resources into banks and thus create “money†in the real economy. Yet this only happens if banks lend this out to consumers instead of using the funds to speculate in complicated global money making schemes. The whipsaw behavior of the market highlights the massive addiction to central banking stimulus we are in.
How to lose 40 percent of your net worth in 3 years – Americans see their net worth collapse during the recession. Federal Reserve survey highlights a case of austerity for the masses and social welfare for the politically connected.
Working and middle class families already feel the burden of a more limited financial middle in our economy. What was once taken for granted such as affordable quality college education, homes with moderate mortgages, and healthcare costs that didn’t put families on the verge of bankruptcy are now largely harder to come by. The Federal Reserve in their triennial Consumer Finance Survey (CFS) showed what most of us already know. The middle class has been crushed since this recession. The survey looks at data going back 18 months but the trend is unmistakable from 2007 to 2010. Middle class families were crushed as their number one asset in housing has plummeted while stocks which are largely consolidated in the top echelons of our wage earners had a stellar recovery since 2009. The median net worth of families fell a stunning 40 percent over this period.