Comments for "Personal Saving and Mortgage Equity Withdrawal"
CRbot says:
This comment thread has been HALO-IZED by CRbot.
http://realize.org/cr/halokit.php?halourl=http://www.haloscan.com/comments/calculatedrisk/1538926167880523611
CRbot Sun Mar 29 15:17:21 2009 CDT #
Hymns for the Lord says:
Very nice analysis, CR.
I am curious about the distribution of savers versus dissavers. Were the latter mostly in the locales where the bubble was most prevalent? Were there differences between urban and rural savings rates?
Parent Post
Hymns for the Lord Sun Mar 29 16:00:58 2009 CDT #
Speed Racer says:
Second
Speed Racer Sun Mar 29 15:19:56 2009 CDT #
Speed Racer says:
I did it twice, in one day.
Speed Racer Sun Mar 29 15:20:20 2009 CDT #
Nemo says:
Well, I am a little busy.
Nemo Sun Mar 29 15:20:45 2009 CDT #
Hymns for the Lord says:
Nemo,
You asked for a reference to an early call by Krugman about a housing bubble. I don't know how far back he called it, but here is an article from 5 years ago:
http://www.washingtonmonthly.com/features/2004/0404.wallace-wells.html
Excerpt:
Such a gap, the economist and New York Times columnist Paul Krugman has written, suggests "that people are now buying houses for speculation rather than merely for shelter," evidence that he called a "compelling case" for a housing bubble.
Parent Post
Hymns for the Lord Sun Mar 29 15:48:57 2009 CDT #
Br\'er Dawg says:
This decline in the saving rate was probably related to homeowner's borrowing against their homes. - CR
The decline also results from an accounting convention that doesn't acknowledge many forms of investment as savings. I am in no way qualified to defend or condemn this tradition but merely note that it exists and influences what is called savings.
Br\'er Dawg Sun Mar 29 15:24:25 2009 CDT #
Fluffy the Obese Persian Cat says:
That doesn't change the relative relationships he discussed in this post, however. Unless std. accounting conventions changed significantly during the time span dsiplayed in these graphs. The argument that the present "increase" in the personal savings rate is due to an end to easy personal debt seems reasonable.
Parent Post
Fluffy the Obese Persian Cat Sun Mar 29 15:29:43 2009 CDT #
Hymns for the Lord says:
There is an urban myth that retirement accounts are not included in the savings rate calculation. If that is what you speak of, rest assured that the zero savings rate was real.
If you're referring to the fact that capital gains were not factored in, that is a true concern but might not matter when all the deleveraging in the economy is complete. The gains of businesses' operational value may turn out to be as much of a mirage as stock and real estate valuations.
Parent Post
Hymns for the Lord Sun Mar 29 16:04:57 2009 CDT #
1currency now [yogi] says:
On previous threads' discussion of banks:
My email the other day to the authors of the Quiet Coup:
Professors:
A great piece. It's so encouraging to read such cogent analysis from Economics professors at MIT. The financial oligarchy you describe uses academia to foster the illusion that human behavior can be quantifiably predicted and that they have discovered the formulae.
If credit is "the lifeblood of the economy", then it must be regulated as a utility along the lines of the real lifebloods, energy, water, transportation, etc. Nothing wrong with the profit motive within democratically assigned limits.
...
Response from James Kwak:
Thanks for your email. I completely agree that we should think of finance as an essential service that thereby needs to be regulated.
...
1currency now [yogi] Sun Mar 29 15:31:13 2009 CDT #
Sr. American Mugabe says:
Savings?? I see demand accounts rising because no one is paying their bills....I want to see this big 'ol government spending-to-facilitate-lack-in-private-spending go POP.
This might be the biggest bubble boom in the history of the world, and I feel like Slm Pickens, just ridin' it in.
Treasury failures in the UK, ours can't be far behind, can they???
Sr. American Mugabe Sun Mar 29 15:31:18 2009 CDT #
EvilHenryPaulson says:
Would be interesting to do a comprehensive investment + work income 'savings rate'
Dotcom bubble definitely caused people to save less of their work income
EvilHenryPaulson Sun Mar 29 15:32:57 2009 CDT #
MrM says:
OT, but quite interesting, IMO - a good article in the NY Times on the IMF and the G20 summit.
One of the key issues Obama wants to focus at the G20 summit is the increase support for the IMF. However, the US is not able to provide substantial funds, so it only promises to match the $100 Bil contributions that the EU and Japan have pledged. The country that can really weigh in is China, but they are obviously not interested in doing that unless they are given a larger role in shaping IMF policies.
So, who (Hu?) knows - maybe we will still see the IMF lecturing the US on the importance of good corporate governance and financial transparency
MrM Sun Mar 29 15:35:19 2009 CDT #
1currency now [yogi] says:
And my post on their blog:
I like the 2-tier approach advocated by Volcker: one with tight regulation of day-to-day commercial banking, another very loose for high rollers.
In most ski country states, if you stay within the boundaries you may rely a level of rescue and care of the trails, notice of dangerous conditions, etc.
Off-piste out of bounds is more exciting, and no longer prohibited as it used to be, but you assume much more of the risk. In some places they can recoup (clawback) the cost of a rescue if you’re lost or injured.
1currency now [yogi] Sun Mar 29 15:35:21 2009 CDT #
1currency now [yogi] says:
So I agree, dawg. (Unless your sarcasm was extremely subtle)
The day they privatize drinking water is the day I finally go out and buy or steal a gun.
1currency now [yogi] Sun Mar 29 15:39:10 2009 CDT #
Bob Dobbs says:
Reposted from end of last thread: interesting feature article on who's currently buying houses in the SF Bay Area, with this telling quote:
"People who buy homes without planning to live in them remain a steady and increasing force in the market. While it's difficult to pin down exactly which buyers are investors, one sign is the address to which new buyers have their property tax bill sent. Two years ago, about 10 percent of home buyers had tax bills sent to an address other than the newly purchased house. By February that was up to 18.7 percent.
Most of those investors appear to be in it for a while, planning to rent out their properties either long term or until the still-far-off day when the market turns.
But remarkably, there is still flipping going on even as prices plunge. From January 2007 through February, DataQuick's numbers show that 2.9 percent of all homes sold had changed hands in the prior 12 months, indicating that they were being flipped (being repossessed by a bank as a foreclosure was not counted as a prior sales event)."
http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2009/03/29/MN3K16M9RT.DTL&type=realestate&tsp=1
Bob Dobbs Sun Mar 29 15:39:33 2009 CDT #
mjc says:
CR: Please, when you provide a multi-year chart where the interesting part is in the last one or two years, also privide a version with just those years. I find it frustrating when you talk about 2008 and 2009 to have a 20-year chart in which it is hard to see what you are talking about in detail.
Thanks,
marty cohen
mjc Sun Mar 29 15:39:58 2009 CDT #
buff_butler says:
mjc,
I (respectfully) disagree. I think that the previous years helped communicate the trend perfectly.
CR: Thanks for everything! I've learned so much here.
Parent Post
buff_butler Sun Mar 29 16:11:29 2009 CDT #
EvilHenryPaulson says:
mjc
If you cannot figure how to zoom in with your computer, you can always still buy a physical magnifying glass
Thanks,
EHP
EvilHenryPaulson Sun Mar 29 15:47:03 2009 CDT #
EvilHenryPaulson says:
Dawg,
Interesting bit about tax bills sent to alternate addresses
---
OT: http://radfilms.com/china_photo_album.html
Photos from trips to China in 1957 and 1978. Things don't change so fast, mostly it's the change in how we interpret our memories
EvilHenryPaulson Sun Mar 29 15:51:03 2009 CDT #
Counterpointer says:
EHP - LOL!
There's nothing quite so entertaining as wataching forecasters screaming down the freeway eye fixed to the rearview mirror, not realizing there's a fat old concrete wall in front them.
Had another sh!tfight with the head of credit risk in my outfit on Friday.
There's none so blind who just won't see.
C
Counterpointer Sun Mar 29 15:51:13 2009 CDT #
Broward Horne says:
I have to second that. CR, you an inconsiderate creep for creating these free graphs which aren't customized to our eyesight or comprehension ability. Please add a "custom graph" option to your site where each of us can specify our needs in detail so that you may more completely satisfy us, your free, non-paying customers!
Broward Horne Sun Mar 29 15:53:27 2009 CDT #
Anonymous says:
Bloomberg: Wagoner to Step down!
What did he say that the USG did not like?
Anonymous Sun Mar 29 15:53:44 2009 CDT #
MrM says:
Had another sh!tfight with the head of credit risk in my outfit on Friday.
Was it about the risk of missing the upturn, with the equity market being up so much for so long, the worst is surely behind us?
That would sound painfully familiar
MrM Sun Mar 29 15:55:21 2009 CDT #
reptillian says:
Imagine withdrawing your equity, then investing it in the stock market. Double whammy.
reptillian Sun Mar 29 15:58:31 2009 CDT #
Counterpointer says:
Broward - nice one. The demands of free riders are infinite. Their depth of rudeness is similar.
C'mon people, there are some standards of civility to be maintained. Financial disaster notwithstanding.
Keep it it cool, civil, and professional, even if yr none of the above.
Even the best homur posters observe this.
C
Counterpointer Sun Mar 29 15:59:04 2009 CDT #
blueridge says:
What I find most striking about graph 1 is how small the drop in DPI actually is so far. So, all the recent economic turmoil, the cracking of the glass edifice that our economy has become was caused by such a relatively minor change in consumer DPI (if we take the view that our economy is 70% consumption based)? I mean, DPI is still barely down at all, and it already feels like TSHTF is here? What's it going to feel like if DPI drops to (gasp!) 2005 levels?
blueridge Sun Mar 29 15:59:39 2009 CDT #
Not Irving Fisher! says:
Rept.. I am sure many did just that
Not Irving Fisher! Sun Mar 29 16:00:55 2009 CDT #
reptillian says:
Interesting that the chart shows disposable personal income increasing during a period when wages have been stagnating. Is that due to using MEW as "income?"
reptillian Sun Mar 29 16:02:41 2009 CDT #
Grumps says:
Re: Graphs
In Firefox (maybe others) double-click the graph so it opens in a new window, then "control +" until it is the size you want.
And since we're being a little touchy about this, Get OFF my damn LAWN. >:o
Grumps Sun Mar 29 16:03:14 2009 CDT #
Anonymous says:
http://benbittrolff.blogspot.com/2009/03/great-flaw-in-geithner-plan-explained.html
Anonymous Sun Mar 29 16:04:26 2009 CDT #
Tim waiting for 2012 says:
dissavers
Hurry copyright that...
That is why I don't think personal cunsumption has bottomed. The savings rate needs to at least get to 8-10% depending on age group.
Tim waiting for 2012 Sun Mar 29 16:05:24 2009 CDT #
Anonymous says:
GM cheif Rick Wagoner stepping down.
http://www.bloomberg.com/apps/news?pid=20601087&sid=a1BaGmyUoHgA&refer=home
"where's my platinum parachute"?
Anonymous Sun Mar 29 16:07:45 2009 CDT #
popeye says:
Elmo cometh. G20 needs gas.
popeye Sun Mar 29 16:09:18 2009 CDT #
1currency now [yogi] says:
GM fired its coach?
Now their foul shots will go in...
1currency now [yogi] Sun Mar 29 16:11:30 2009 CDT #
Bfatz says:
BREAKING NEWS GM Wagoner stepping down
http://www.themarketguardian.com/2009/03/breaking-general-motors-chief-rick-wagoner-said-to-step-down/
Bfatz Sun Mar 29 16:14:04 2009 CDT #
Tim waiting for 2012 says:
Shouldn't the captain go down with the ship?
Tim waiting for 2012 Sun Mar 29 16:16:30 2009 CDT #
EvilHenryPaulson says:
http://www.aleablog.com/the-world’s-safest-sovereign-debt/
Excerpt of CMA DataVision Global Sovereign Credit Risk Report Q1-2009, proprietary implied rating/default within a 5 year period
How much of Norway's exports are Kroner dependent?
EvilHenryPaulson Sun Mar 29 16:16:44 2009 CDT #
Some Investor Guy says:
CR,
You have some good freudian slips. I think it's InSinkErator that makes "disposal income". Most Americans make "disposable income".
Some Investor Guy Sun Mar 29 16:19:02 2009 CDT #
Anonymous says:
Even the experts predictions are only WAGs. Always presumed as much. Downside is that the prognosticators on this board are just as likely to be right as anyone else. Scary.
----
"The expert on experts is Philip Tetlock, a professor at the University of California, Berkeley. His 2005 book, “Expert Political Judgment,” is based on two decades of tracking some 82,000 predictions by 284 experts. The experts’ forecasts were tracked both on the subjects of their specialties and on subjects that they knew little about.
The result? The predictions of experts were, on average, only a tiny bit better than random guesses — the equivalent of a chimpanzee throwing darts at a board."
http://www.nytimes.com/2009/03/26/opinion/26Kristof.html?_r=1&emc=eta1
Anonymous Sun Mar 29 16:20:58 2009 CDT #
sm_landlord says:
OK, if you were Wagoner, would *you* want to keep that job?
Look at what the congresscritters did to Ed Liddy of AIG, and he didn't take the CEO role until after the company augured into the ground under previous management. Wagoner is directly responsible for a great deal of the damage at GM, and should have been fired some time ago. I'm amazed that it took this long for him to figure it out.
sm_landlord Sun Mar 29 16:21:17 2009 CDT #
MrM says:
BREAKING NEWS GM Wagoner stepping down
Ken Lewis and Vikram Pandit certainly carry a lot more weight in DC than Wagoner. The hypocrisy is palpable.
MrM Sun Mar 29 16:22:46 2009 CDT #
1currency now [yogi] says:
Are you saying I should trade my loonies for Norwegian wood?
Now if that site could only tell me they were using data from all CDS outstanding and what the gross is...
No, no, under the rug,
1currency now [yogi] Sun Mar 29 16:24:47 2009 CDT #
1currency now [yogi] says:
Nemo's chimp can outthrow any old prognosticator.
Who would have been a better President, Reagan or Bonzo?
1currency now [yogi] Sun Mar 29 16:29:05 2009 CDT #
EvilHenryPaulson says:
Sarkozy has signed deals for France and Areva to mine uranium in Niger and Democratic Republic of Congo
EvilHenryPaulson Sun Mar 29 16:29:12 2009 CDT #
nova says:
We got some feel good auto news acomin.
There is going to be some serious suit smiling tomorrow.
Maybe even a media bite of union man gettin with the plan.
you want a car - they got money for you to borrow
oh, its going to all right
oh, its going to be all right
Suppliers gonna get cash thrown their way
Going be a brand new day
Boys will be back on the line
Everybody gonna be feeling fine
nova
nova Sun Mar 29 16:29:46 2009 CDT #
Allen C says:
Rather common for execs to leave prior to BK. Perhaps their funding needs are now higher.
Allen C Sun Mar 29 16:31:23 2009 CDT #
Br\'er Dawg says:
Sarkozy has signed deals for France and Areva to mine uranium in Niger and Democratic Republic of Congo
That's what happens when 77% of your electricity is nuclear.
Br\'er Dawg Sun Mar 29 16:33:02 2009 CDT #
EvilHenryPaulson says:
oh wow, http://www.spiegel.de/international/world/0,1518,616130,00.html
The Germans can't comprehend that even if they ruled the UAE as a colony, there wouldn't be enough wealth there to keep them out of the rain... the problem is big
in any event, there has been no talk about what private assurances on future state support were necessary for the investment in Daimler
EvilHenryPaulson Sun Mar 29 16:33:28 2009 CDT #
Anonymous says:
So Waggoner's killed the goose. Hope he enjoys his retirement.
Anonymous Sun Mar 29 16:34:02 2009 CDT #
kuato says:
http://www.mybudget360.com/saving-money-is-bad-for-the-economy-personal-savings-rate-higher-consumption-slightly-up-banks-get-new-american-express-and-markets-begging-for-money/
kuato Sun Mar 29 16:34:40 2009 CDT #
1currency now [yogi] says:
OT
That stupid Thomas Paine in the ass virus hitting blogland, do they use bots to spam that crap or is it Sirhan Sirhan "Jack is a dull boy..." types?
1currency now [yogi] Sun Mar 29 16:35:01 2009 CDT #
Broward Horne says:
"People who buy homes without planning to live in them remain a steady and increasing force in the market"
------------
Dead-cat bounce behavior.
Bodes ill for a quick recovery in house prices.
Broward Horne Sun Mar 29 16:35:51 2009 CDT #
nova says:
EHP, Hamad, in the article you linked, says America is in a depression. He also does not see the US coming out of it as a, or the, superpower. The US only role now is to prevent total collapse. Interesting, as he is not a total idiot.
nova Sun Mar 29 16:38:37 2009 CDT #
dow30 summer weight says:
wasn't it just the other week (during the bac/c/jpm profitable jan/feb annoucnments) that GM said they probably wouldnt' need the "March money"?
i guess there were some unforseen things that popped up
dow30 summer weight Sun Mar 29 16:38:38 2009 CDT #
1currency now [yogi] says:
Sorry, can't stomach an interview that starts with, "Your Highness..."
As a kid I always wrote it in my head as "your hinus"
1currency now [yogi] Sun Mar 29 16:39:45 2009 CDT #
nova says:
dow 30 summerweight
like car sales and projected car sales?
nova Sun Mar 29 16:40:11 2009 CDT #
EvilHenryPaulson says:
http://www.bloomberg.com/apps/news?pid=20601087&sid=ak4RdCRi4Thc&refer=home
Story about Hyundai using the low Korean Won to take sales away from Toyota which has had a high Japanese Yen
This is just another sign alongside the road saying "Welcome to Manic Depression"
EvilHenryPaulson Sun Mar 29 16:40:52 2009 CDT #
nova says:
Spiegel was probably told to address him that way.
nova Sun Mar 29 16:41:14 2009 CDT #
1currency now [yogi] says:
"Spiegel was told..."
Which taints the interview.
Parent Post
1currency now [yogi] Sun Mar 29 16:46:01 2009 CDT #
dow30 summer weight says:
nova, i bet he wished they popped up! :)
dow30 summer weight Sun Mar 29 16:45:20 2009 CDT #
Anonymous says:
http://www.spiegel.de/international/germany/0,1518,615962,00.html
Nothing like an unknow bovine disease that cause the calves to sweat blood until they die. Vegetables anyone?
Anonymous Sun Mar 29 16:47:05 2009 CDT #
Br\'er Dawg says:
"People who buy homes without planning to live in them remain a steady and increasing force in the market"
------------
There have to be as many knifecatchers as there were bandwagon passengers. I'm still waiting for the "bargains" to flush out the remaining weak hands before reentering. These are the idiots that thought it was good planning to assume double digit appreciation when paying on the way up only this time they are betting on rent stability or even appreciation going forward. I'm not opening my wallet until the deal pencils at 70% of current gross.
Br\'er Dawg Sun Mar 29 16:48:07 2009 CDT #
Anonymous says:
From link:
Wagoner said as recently as April 19 that he didn’t plan to resign
Hunh? April 19th?
Anonymous Sun Mar 29 16:54:03 2009 CDT #
mark says:
On the loal Detroit news station they just said that the White House has demanded that Wagoner step down.
Parent Post
mark Sun Mar 29 17:03:29 2009 CDT #
popeye says:
Anonymous says:
<tbody>
http://www.spiegel.de/international/germany/0,1518,615962,00.html
Nothing like an unknow bovine disease that cause the calves to sweat blood until they die. Vegetables anyone?
MCD for everyone !!
</tbody>
popeye Sun Mar 29 16:55:37 2009 CDT #
popeye says:
rats
popeye Sun Mar 29 16:55:56 2009 CDT #
popeye says:
free MCD for everyone:
http://www.spiegel.de/international/germany/0,1518,615962,00.html
sorry Anon, tried to give you credit.
popeye Sun Mar 29 16:57:17 2009 CDT #
1currency now [yogi] says:
Good thing it didn't hit their pigs. Then they would blame the ....
1currency now [yogi] Sun Mar 29 16:58:03 2009 CDT #
MrM says:
popeye - you can always deleted a messed-up comment :D
MrM Sun Mar 29 16:58:34 2009 CDT #
ren says:
Someone is now selling banker bailout toilet paper. I have no connection with this product.
http://www.banksterbuddies.com/
ren Sun Mar 29 17:00:55 2009 CDT #
popeye says:
From the article: "Veterinarians have been studying the unexplained deaths for the past two years, and the results of their efforts began to emerge last year. "
How many steaks/burgers have you eaten in the past TWO YEARS while this has been studied ??
popeye Sun Mar 29 17:02:21 2009 CDT #
Black Star Ranch says:
....."GM and Chrysler have to prove their viability as a condition of a federal bailout released under former President George W. Bush, and both have asked the current administration for more money."
.....has it occurred to anyone that if these two dinosaurs were to go belly-up, Ford might stand a better chance? No sense having one or two healthier companies - lets have three weaker ones - AND, have the taxpayer pay for them. And, I don't buy the parts manufacturers challenges with just one carmaker - the same number of total units will still be sold regardless the label on the car. Bailing out GM is in the name of demo voters & UAW & picking winners and losers.
Black Star Ranch Sun Mar 29 17:13:43 2009 CDT #
CRbot says:
New Thread: GM CEO to Step Down as part of Bailout Agreement
http://www.calculatedriskblog.com/2009/03/gm-ceo-to-step-down-as-part-of-bailout.html ( 0 comments ...You could be FIRST! )
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CRbot Sun Mar 29 17:13:48 2009 CDT #
Lawyerliz says:
Disposal income. I like it.
Chart it in you garphs.
Lawyerliz Sun Mar 29 17:17:10 2009 CDT #
Anonymous says:
BSR-
Ford has bet the farm they will be the last domestic car producer left standing. That is when they will ask for bailout funds.
Anonymous Sun Mar 29 17:21:56 2009 CDT #
Lawyerliz says:
I wonder what they do with the dead calves? I really hope they burn them and don't grind them up for pet or people food.
Lawyerliz Sun Mar 29 17:25:01 2009 CDT #
Anonymous says:
CR writes: "Now that the Home ATM is closed, the saving rate is rising because of less borrowing - as dissavers are forced to live within their incomes."
Not if Obama and our Congress have anything to do with it. Time to loosen up the lending standards. Just a matter of time.
Anonymous Sun Mar 29 17:54:15 2009 CDT #
Sara R says:
How much of the increased savings rate is people withdrawing money from the stock market to put into a savings account?
Sara R Sun Mar 29 18:25:11 2009 CDT #
sanjay says:
I don't think that is how it is calculated. It is income minus spending. For years economists told us not to worry because this measue didn't take into consideration the "saving" from appreciating stocks and real estate. In their mind there was an equivalency between cash in the bank and the unrealized gain on equities and real estate!
Parent Post
sanjay Sun Mar 29 20:30:25 2009 CDT #
Anonymous says:
So this is a double-whammy: not only did the savings rate go to zero, but people borrowed, too (against an asset about to tumble in value, no less).
I don't see how anything but an 'L' shape recession makes sense.
Anonymous Sun Mar 29 19:16:58 2009 CDT #
sanjay says:
this discussion highlights the great danger of looking at average rates. There is a large segment of the population who are prudent and responsible. 35% of homeowners have no mortgages and that percentage has held pretty steady throughout the the refinancing boom. Because of them the average debt to home equity looked a lot better than what was happening at the margin. I suspect the same is true of savers. There is probably a significant percentage that saves inexcess of 10%- add to that the skew with regard to higher income people who have a greater ability to save and my suspicion is that even the improved saving percentage masks the real terrible condition that a large percentage is in. Since it is margin not the average that counts we may require even larger saving percentage.
sanjay Sun Mar 29 20:28:26 2009 CDT #
loudnclear says:
I wonder if there will be a blip in MEW over the next few months from people cashing out their HELOCs before their banks reduce the available balance.
loudnclear Sun Mar 29 21:06:24 2009 CDT #
END