PeakTrader.com Forum Index PeakTrader.com
Economics, Portfolio Optimization, and Technical Analysis
 
 FAQFAQ   SearchSearch   MemberlistMemberlist   UsergroupsUsergroups   RegisterRegister 
 ProfileProfile   Log in to check your private messagesLog in to check your private messages   Log inLog in 
Log inFast Charts

Feeding the Superpower

 
Post new topic   Reply to topic     PeakTrader.com Forum Index -> Economic Review
View previous topic :: View next topic  
Author Message
administrator
Site Admin


Joined: 28 Dec 2005
Posts: 11966

PostPosted: Sat Aug 23, 2008 4:14 pm    Post subject: Feeding the Superpower Reply with quote

The housing boom was needed to raise U.S. actual output towards potential output, i.e. close the output gap, and capture enormous real assets and goods in the global economy. The stock market crash in 2000-02 was a correcting mechanism to keep future U.S. labor supply and demand in equilibrium, because the U.S. economy cannot support too many people retiring early. Deflated housing prices is a similar correcting mechanism. U.S. net wealth increased so fast in the 2000s, along with equity extraction from relatively lower income homeowners, that the correction took place quickly, i.e. between the massive U.S. Creative-Destruction process from 2000-02 and deflated housing prices that began in 2007.

The link below shows U.S. household net wealth (i.e. assets minus liabilities) increased to about $60 trillion in 2007 (see chart). The second link is a chart of U.S. home equity extraction, which was a transfer of wealth from savers and rich foreigners to U.S. borrowers, including Americans who couldn't really afford to buy houses or more expensive houses.

"Wealth in the United States is commonly measured in terms of net worth which is the sum of all assets, including home equity minus all liabilities.[1] For example, a household in possession of an $800,000 home, $5,000 in mutual funds, a $45,000 IRA would have assests totaling $850,000. Assuming that this household would have a $250,000 mortage, $40,000 in car loans, and $10,000 in credit card debt their debts would total $300,000. Subracting the debts from the worth of this household's assets, (850,000 - $300,000 = $550,000) this household would have a net worth of $550,000.[1] The wealth, more specifically net worth, of households in the United States is varied with relation to race, education, geographic location and gender. As one would expect households with greater income featured the highest net worths, though high income cannot be taken as an always accurate indicator of net worth. Overall the number of wealthier households is on the rise with baby boomers hitting the highs of their careers.[1]"

http://en.wikipedia.org/wiki/Wealth_in_the_United_States

http://bp2.blogger.com/_pMscxxELHEg/SFFzZFpvUFI/AAAAAAAACI4/lO_HQfXaNxo/s1600-h/MEWQ12008.jpg
Back to top
View user's profile Send private message
Display posts from previous:   
Post new topic   Reply to topic     PeakTrader.com Forum Index -> Economic Review All times are GMT - 8 Hours
Page 1 of 1

 
Jump to:  
You cannot post new topics in this forum
You cannot reply to topics in this forum
You cannot edit your posts in this forum
You cannot delete your posts in this forum
You cannot vote in polls in this forum


Powered by PeakTrader 2.0.8 © 2001, 2002