I don’t post financial stuff or graphs … it’s above my pay grade … but, I do grok this one quite well.
The two great evils that will sink USS America; debt and financial inequality.
Charles Hugh Smith (Of Two Minds) in the article which contains the above graph says;
“The wealth effect failed, the Fed failed, regulations failed, politics failed. But thanks to the Fed and the self-serving political class, the entire U.S. economy is now utterly dependent on this completely corrupt and destabilizing fraud–the stock market. If the stock market stumbles and collapses, the economy–now totally dependent on phantom capital –also stumbles and collapses. “
SOURCE: “The Stock Market, Fatally Wounded by the Truth, Will Stumble and Crash”
THE END
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Good or bad, right or wrong. like it or not, wealth/income inequality, if it gets bad enough, lead to a 3rd world country. Who wants that?
Thanks Stucky,
I had just started putting our (toes) money back in the (pond) market by dollar cost averaging into the s&p 500 vanguard mutual fund Dec last year. I will get out again on Tuesday.
I got us out of the market at the end of 2008. In 2014 found a couple of financial advisers via the free chicken dinners (in Colorado one just has to declare themselves and hang out a shingle). We were tired of almost zero interest and one adviser put us into real estate loans that paid 7 1/2 percent interest. All was fine until when it came time to get money out in Nov 2017 we were left hanging with calls not returned, etc. 4 Dec the outfit that would be known as the Woodbridge Ponzi scheme. To add insult to injury the interest we got was declared ponzi interest so it subtracted our loss of 25K down to below 18K. It will be years before the BK administrator can settle selling off the properties. The only reason a guy named Shapiro and his wife are doing time is that most of the people that lost hundreds of thousands were the chosen, mostly retirees and lots in Florida. Like Bernie Madoff, one doesn’t shit where one eats without paying for it when found out.
https://en.wikipedia.org/wiki/Woodbridge_Securities
The rest of our savings went into a 10 year note paying 8% interest per year every three years. In April ’20 the outfit who I cannot name stopped paying due to covid economic downturn as the investments were in hotels and vacation resorts etc. We were due the 2nd 3 year compounded payment 1 May of over 28K. That didn’t happen and the outfit filed for BK on a weekend in the middle of June. Now they are trying to come out of BK because they realized paying the lawyers over 500K dollars per quarter was a no go. They asked for a 2 year forbearance from us lenders until things start picking up. We await BK judge decision. I want to believe things will work out and we will be made whole, but the old saying of want in one hand shit in another seems to be the norm.
Found another Fin.Adv. 1 1/2 years ago and his algo was set to not lose as much money on market down turns. But with all the buying and selling I had more in wash sales then in income. I got out of that last Nov. after telling him I didn’t want to lose 2 bucks for every 3 bucks gained and not be able to take the tax loss.
It looks like it is back to saving in the credit union with purchasing power devaluing by 50% every decade.
We aren’t living under a bridge and were able to sell out house last summer and buy a new build with an affordable mortgage after putting sale proceeds into it. This way we can hopefully pay it off before we pass on and son can inherit a newer home and make a rental out of it or sell it at the stepped up basis.
I realize posting this makes me a big time chump but what really smarts is telling my wife all this bad news as it unfolded. She trusted me and I let her down.
When our son was born thirty some years ago we asked ourselves what kind of a world did we bring him into. Well, this week our grandson was born and we triple wondered what kind of a world was he brought into.
I don’t think you should think of yourself as a chump or feel bad when telling your wife or anyone else. First of all, we cannot be experts in all things. Secondly, there are many nefarious people who can sell you anything especially the uninitiated. And thirdly, even those in the know (to some degree) can be taken in by the best sales-people and circumstances they find themselves in. The old saying of being able to fool some of the people all the time and all the people some of the time applies. These are natural human failings which we are all prone to in one field or another, usually in most fields. We simply cannot be all knowing in all things.
My best advice having been in the financial / investing world for a long time; diversify your assets. The old saying applies; don’t put all your eggs in one basket. Second best piece of advice, no one knows anything about the future of the financial markets. Third piece; if it sounds too good then it probably is. And fourth piece, investing is not hard to do and is within the reach of anyone of normal intelligence. The problem is to (1) not fall prey to the two emotions that can ruin you; greed and fear, and (2) have a long term perspective, have patience. Common sense goes a long way.
Hope it works out for you.
Lots and lots can be traced back to Gramm-Leach-Bliley, lots and lots more to FDR forcing one FED interest rate, and lots and lots most to Wilson’s diktat to the FED to buy government paper.
Not much to do once it gets this bad except to prepare for a rebuild.
Stuck – there are a lot of things going on there. For instance in 1980, over 20% of the people still worked in manufacturing. That is currently around 8%, and falling. The world globalised heavily during the time since 1980, so Americans have to, you know, actually compete. And one thing that the average American, addicted to debt, big screens, igizmos, etc., and poorly educated do not do well is compete.
Service jobs began to be the predominant job type. One thing about service jobs is that they pay poorly.
Tech began to take over, and one thing about the average Joe, say below the 80th percentile in ability, that he does not do well with is with tech development.
The world has changed. I said, and still say, that owing to these factors only, and ignoring all the other factors hitting the working and lower classes, means that their wages must fall. It is inevitable. I ran various numbers, and they usually came up around the same – that the standard of living for the bottom 3/4 of the population needs to drop by around 1/3 to 1/2 to reach an equilibrium. It is underway, more slowly than I expected as the standards are being propped up by enormous quantities of debt. American workers simply do not add enough value to earn the wages they currently are paid vis a vis global competition and the jobs they do.
Here is an example. One of my kids is a world class software engineer, and was just promoted one level. One level. The wage increase was almost $100k. That kid is 29, and can get a dozen job offers literally tomorrow making more than now. True. But here is the deal – that kid is in the top 1% of all software engineers. That rarified air and salary are available IF you are top. If you are an average, or even a good, software engineer, you would be working for less than the annual bonus paid to people like my child. The demand for the top talent is enormous and unfulfilled, but almost no demand for those outside that category.
If you can really, really grok tech, you are currently king. And may remain so for a very long time. The Teslas, Googles, Microsofts, Ubers, Amazons of the world will keep snapping those types up. If not, the world is getting hard faster.
We are nowhere near the bottom. The masses being unhappy and revolting will not change this reality – they are not capable of adding huge value in a tech world. Even reasonably bright people will suffer, as if you cannot grok complex algorithms then you are shit out of luck.
Llpoh, there’s no way this terribly educated, gaslit, cowardly constituency could ever amount to a hill of beans in STEM. Even SAO, alleged engineer that he is, continuously repeats provably false bullshit like a broken record. Between the spectrum sufferers and the Forrest Gumps, stick a fork in it.
America is stuck on stupid and can’t switch gears.
There’s a piece of me that roots for Russia to hit the Reset button for the 1/3 of folks who could actually rebuild this country over the next few generations. But even so, we’ll never see the 1950s level of honest prosperity again in our lifetimes.
Tell your son to take his hard-earned cash and save it because after even 10 years of performing at a very high level, you’re burned out. The more you outperform, the more is expected of you from people who have ZERO clue of how to do anything other than power up a CPU. The only reason I’ve lasted this long is my family but I’m within 2 years of dropping the mic for good and being happily out of IT. The other thing you hinted at is also a deal killer: Working for the Big Boys (been there, done that) is not what it used to be. The “Social Democracy/Justice/Diversity” bullshit has destroyed any semblance of objectivity and classical engineering in these firms.
Oh, and I tell anyone with an IQ for IT to go back to the basics, work on breadboards and circuits, and learn how to program them. Robotics is the future.
AOC – well said.
My kid is saving the bulk of income. The bosses are all techies, and so there is not that issue. The organization truly exists to support the software engineers. All others are expendable – programmers, etc., are all expendable. But not the engineers, who are entirely gold plated and untouchable.
The social justice bullshit is however endemic in the organization, but less so in the people, where the more conservative just keep their heads down mostly. Don’t ask don’t tell is the name of the game.
The work is not burnout level, it seems. My kid works mostly in international compliance – keeping the tech systems in line with the myriad and constantly changing international regulations, which is growing old as the fight with red tape is constant.
The next step is joining a start up, so it seems. It would mean walking away from huge salary in exchange for stock in a start up – where you can seriously strike it rich, or end up with nada. I think that will happen after the nest egg is consolidated.
Yup, a programmer does not an engineer make. Sounds like your son is shooting straight. That is awesome, especially saving what he can. I tell my kids all the time: Mathematics, engineering, robotics, and apply it to arable land once you have the capital.
Worked for an outfit that sold worldwide into the datacomm market. The red tape for each and every European country (that was before the EU) was mind boggling. Even the Canadians were at times a pain in the ass. Our out there was to hire a CSA auditor from Ontario to review and renew our CSA license every year. The guy wasn’t an idiot, but he sure wasn’t overly bright; play along to get along. Too bad we couldn’t have put all our resources into productive uses-the business might still be have been a going concern.
Mostly deals with Europe issues, the UK in particular. A red tape nightmare. Steady working to keep systems updates.