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Americans' Standard of living plummets

Discussion in 'Economics and Financials' started by padre31, Oct 19, 2011.

  1. DeDolfan

    DeDolfan Premium Member Luxury Box

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    Agree with all except perhaps the last line. The consumer is at fault equally as well. They used credit to over buy what was offered by biz. If they had said **** it instead, then builders may have built more modest homes, etc.
     
  2. Fin D

    Fin D Sigh Club Member

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    I disagree.

    Housing is necessary. Whenever you have a product or service that is necessary, the consumer loses their power.

    Gas is a necessity, the consumer has no power.

    While food is a necessity, there are so many options there's room for consumers to dictate the market. Not so with things like housing, medical care, energy, etc. Notice a=how all of these things have prices set based on principles outside the market place.
     
  3. padre31

    padre31 Premium Member Luxury Box

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    Exactly, what is worse, a politician who pointed this out, Ron Paul, is now labeled as a kook by the very people who created this situation in the first place!

    It's madness, and I have a good grasp of Debt Financing and Fiat Currency, so it's not mere ideology speaking from my end.



    Wages and income growth outside of the top 1% will never be what it once was, American workers have no leverage.

    We had a Volvo plant shut it's doors in Asheville, we've had several plants close their doors in recent yrs.

    Which to me, means folks really should accept the situation and realize it basicaly is a war of Consumerism v Personal Economies, I'll grant the herd will always spend more then they make, the key is, don't be a member of the herd.
     
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  4. DeDolfan

    DeDolfan Premium Member Luxury Box

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    Housing is necessary. 2500 sq ft McMansions are not. Gas also is a necessity and, yes, we have no power over that. However, gas is a necessity only because transportation is. Bur porches and bentleys are not. One can greatly miitgate their fuel costs by their vehicle selection.
    If ppl refuse to but McMansions and high end vehicles, the mkt will adjust downward to meet the demand, yes?
     
  5. Dol-Fan Dupree

    Dol-Fan Dupree Tank? Who is Tank? I am Guy Incognito. Club Member

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    Where do you live? I live in Bellevue which is next to Microsoft and the entire city is not filled with McMansions and porches.
     
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  6. Fin D

    Fin D Sigh Club Member

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    You're buying into the hype, that isn't real.

    McMansions aren't the norm nor is 2500sq ft something to treat as huge. I live in a mobile home that is 2300 sq ft. Is my mobile a mansion? A modest 2 bedroom 1200 sqft home went for almost $300K in Orlando before the bubble. Orlando isn't a rich area. Neither was the home. That isn't a mansion.
     
  7. padre31

    padre31 Premium Member Luxury Box

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    Or by not driving at all, there are more costs with a vehicle then just gas, add in cars lose money, guaranteed, yet are Americans second largest capital investment behind mortgages, and that does not make much sense to pour money into the things...and yet...pour it in we do.

    Why? Other then Americans have been trained to own the nicest, most expensive car, they can afford.


    Would depend, is the mcmansion that much below market value as to make it a good value?

    Which brings up the next point, say you do buy that home below market value, the City/County will then slap you with property taxes as if the house was worth as much as it was in the late 00's, and that can easily be 8k or more in property taxes.
     
  8. DeDolfan

    DeDolfan Premium Member Luxury Box

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    are you arguing that the average sized house of today is no different than 30 yrs ago? All I'm saying is that today's house are much larger.
     
  9. DeDolfan

    DeDolfan Premium Member Luxury Box

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    Just what is it you're arguing? of course modest homes increased during the bubble but they still cost less.
    Your 2300 sq ft mobile could be a mansion I suppose. It all depends on how you look at it. However, my point is that you likely don't need all that area tho, not to survive in at least. All I'm saying is that ppl need to be held accountable for their actions as well as the biz. They didn't, they're suffering for it. That is the hype.
     
  10. Dol-Fan Dupree

    Dol-Fan Dupree Tank? Who is Tank? I am Guy Incognito. Club Member

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    I guess I am arguing that you do not know what a McMansion is. I have seen McMansions. A little bigger home does not make a McMansion.

    Plus a lot of people today buy condos and those are smaller or the same size as a house 30 years ago.
     
  11. Fin D

    Fin D Sigh Club Member

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    The average foreclosed home value is around $160K. That is faaaaaaaaaaaaaaaaaar from a McMansion. People had to overspend to get a reasonable house.
     
  12. padre31

    padre31 Premium Member Luxury Box

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    "Had"?

    No they didn't they chose to, in fact I'd argue if you had to leverage your wages that heavily, then financially you are far better off in your 1200 sq ft mobile and investing the surplus from not being saddled with a huge mortgage payment.

    The ideal here is to lower fixed costs, and increase liquidity.

    Americans though, do not really think like this, for example:

    say you make 35k a yr, a decent salary, the American budget looks like:

    -Housing
    -Car
    -Utilities
    -Food
    -insurance
    -Consumer debt payments
    -Taxation+Fees
    -Entertainment

    What Americans usually do is:

    -buy more house then they can afford, or even use
    -buy a inefficient vehicle, on credit
    -not concern themselves with saving electicity, or heat, or water, even via smart ways like modern hot water heaters
    -eat out 3 times a week, if "we" go cheap, we wind up with highly processed food that is unhealhty
    -take the lowest co pay possible, meaning the highest insurance rate
    -Avg American has 5k in credit card debt
    -do not take itemized deductions, or look for tax breaks, even on sales taxes
    -has high end TV service, still goes out to movies, netflix, if younger hours and hours of video games

    No where are the ways that can be made to be more productive, healthy, and capital sustaining?
     
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  13. Eshlemon

    Eshlemon Well-Known Member

    And its not just an American budget problem but a global budget problem. Even in countries that are brought up as the only if we had their taxation and monetary social "equality" comparisons such as Australia.

    Australia Has Highest Household Debt to Disposable Income Ratio in World
    [​IMG]
    Source: Australian Bureau of Statistics


    Home truths: Australia trumps US when it comes to McMansions
    http://www.smh.com.au/national/home...hen-it-comes-to-mcmansions-20091129-jyva.html

    [​IMG]

    The average size of new homes around the world in square metres.

    ''Another way of looking at it is the number of bedrooms,'' said a Commonwealth Securities economist, Craig James. ''Around 20 years ago only one in every six homes had four or more bedrooms. By 2006 it was one in every 3.5 homes.
     
  14. DeDolfan

    DeDolfan Premium Member Luxury Box

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    Oh, so I guess you're saying the average house today is no larger than 30 yrs ago? BTW, house does not equal condo. The only similarity is they are both a resident. But the condo is another story.
     
  15. Dol-Fan Dupree

    Dol-Fan Dupree Tank? Who is Tank? I am Guy Incognito. Club Member

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    I am saying you do not understand what a McMansion is.
     
  16. DeDolfan

    DeDolfan Premium Member Luxury Box

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    People HAD to do no such thing. If the average value of a foreclosed home is $160K, that is after the 22-27% reduction after going into bankruptcy. That would have put the value around the $220-230K range. But I don't know where you dug this $160K figure from but it doesn't matter. It doesn't matter what kind of homes are being foreclosed on. What matters is being over extended to begin with. The builders didn't put these ppl in that situation. I lay more of the blame on the banks writing the loans the most. That helped to creat the faux mkt for more expensive homes whether they are or whether or not you want to call them mcMansions. The terminolgy is moot as they are whatever they are. Call them what you wish, I don't care. If a person is able to pay $75K for a house but is able to buy one for $90K, should he do it? 30 yrs ago, he wouldn't have been able to because no one would write the loan then. I am arguing that it is not all the fault of biz for these misfortunes.
     
  17. DeDolfan

    DeDolfan Premium Member Luxury Box

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    Well, please enlighten me then.
     
  18. Dol-Fan Dupree

    Dol-Fan Dupree Tank? Who is Tank? I am Guy Incognito. Club Member

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    McMansion are much bigger than 2500 square feet.

    They look like small mansions and are all in a McMansion community. They are not Quadrant Homes.
     
  19. DeDolfan

    DeDolfan Premium Member Luxury Box

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    yea, well, OK, by a technical definition I suppose but that's not really the point, how big it is. The point is that the larger the home, the higher the cost. Higher than these ppl could afford or needed. The nat'l Assoc of home builders said that average size homes in 1950 were 983 sq ft compared to 1500 in 1970 up to over 2400 in 2005. That's the last figure available but I'd be willing to bet they got even bigger since then, at least until the bust. Nothing wrong at all in buying these kind of things as long as you can afford it. That's the crux of my argument which is that most ppl in trouble today simply over extended themselves. Not whatever a mcMansion is defined as. I only used that as an example for illustration. I'm sorry it's definition was fixated upon too much.

     
  20. padre31

    padre31 Premium Member Luxury Box

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    Hold up a larger home is called for if you have a large family, as a Vet of livng on top of family members, some extra space would have been surely appreciated!

    This McMansion stuff is a talking point De, probably short hand for "conspicous consumption", like buying a BMW when an Accord will do, and it is at the root of the problem America has, and one that has been accelerated.

    Americans want to do better then their parents did, which is fine, however they also want to do so NOW!
     
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  21. DeDolfan

    DeDolfan Premium Member Luxury Box

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    Yup, pretty much!
     
  22. reshelaL

    reshelaL New Member

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    Talking about money and taxes have you heard that the Internal Revenue Service has few fans. Though a lot of people do not understand it at first, the political expediency of cutting the IRS budget is coming back to bite taxpayers where it hurts. Resource for this article: IRS budget cuts costing taxpayers. While I guess lowering taxes will lead to a larger economy, but the big problem is that there will be more unnecessarily unemployed – with the silver lining that there will be lower taxes.
     
  23. jw3102

    jw3102 season ticket holder

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    Most people I know who are in debt are not people who couldn't afford to buy gas or a modest house. They are individuals who wanted to purchase more house than they could really afford, or a car which was really more expensive then they needed. You also have many individuals who think that they have to have a cell phone, when all they really need is a phone in their home.

    Many Americans are consumer addicts who think that they have to have the latest new gadget which comes out on a weekly basis. While there are certainly individuals in America who have trouble meeting their normal expenses on their present wages. The vast majority of the debt in America was run up by Americans who earned enough to provide themselves a, "normal standard of living', but instead went into debt because they made a decision to live beyond their means.

    I think that the best thing which could happen in America in the future is that credit cards go away and the only cards issued by banks would be debit cards. This way all Americans would be forced to only buy items they could afford at the time they are going through the check out line. Credit cards were the worst idea of the 20th century.
     
  24. Fin D

    Fin D Sigh Club Member

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    Simply not true.
     
  25. cdz12250

    cdz12250 Season Ticket Holder Club Member

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    Your answer, then, is to get used to a lower standard of living. You may be right, but I don't know if it's practically possible. There are a lot of folks from other countries in Miami, for instance, who are willing to accept a lesser income or lesser profit margin, live accordingly, and give a good day's work for a day's pay. This is because, regardless, they're doing better here than they were where they came from. I don't know that their children or grandchildren will think or live the same way. Making do with less is not a permanent solution. As Adam Smith said, self-interest drives the economy.

    There is an element of rising expectations to the problem. The middle class now aspires to what used to be an upper middle class lifestyle. We got used to a rising standard of living where economic goodies flowed further down the pyramid. I remember when a color TV was a luxury, and so was a Buick instead of a Chevy. A Cadillac was for the rich. Home ownership was a lifetime achievement. Now it's an expectation.

    Globalization and cheap Chinese goods have a lot to do with it. Problem is, the manufacturing base that made us an economic giant with close to full employment has moved to Asia to take advantage of the cheap labor, and so have the jobs. I have seen little push (a bill is being proposed now) for changing the tax structure to equalize the cost of American workers, who are more productive, with cheap labor abroad. We should do that, because in the end, the standard of living is dropping because the economy is in the doldrums in comparison to the developing Asian economies (where the jobs have gone). We should also look at relaxing the regulatory climate in which our industry operates.

    Forget Keynes; we're too far in debt to prime the pump. Drop taxes and regulation on our industries, and create jobs here by making our labor costs globally competitive. Give investors worldwide an economic incentive to invest in our industry. That will restart the economy.
     
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  26. FinSane

    FinSane Cynical Dolphins Fan

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    We've been doing that since Reagan, and by no coincidence, that was when the jobs began to disappear.
     
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  27. jw3102

    jw3102 season ticket holder

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    You can aspire to live a lifestyle all you want. The fact is though that you can truly only live beyond your means for a temporary period of time. Eventually you have to pay off your bills or your going to go bankrupt.
    There may have been a time when middle class Americans could charge all they want on their credit cards, or take out an equity loan to buy items they really couldn't afford without an equity loan. That time has ended.

    Figures show that prior to the credit market collapse in 2008, nearly 50% of working Americans were living beyond their means. They were doing this by using their credit cards and equity loans to live the lifestyle they really couldn't afford on their real income. Just as expectations of the middle class were raised during the boom years, these expectations now need to lowered based on the economic reality of today.
    Home prices are not going up at this time. Therefore banks are not giving out home equity loans to the vast majority of middle class home owners. Credit card limits have been reduced for millions of Americans and living beyond your means today is much harder to do then it was prior to 2008. I find this to be a good thing.

    The truth of the matter is that many middle class Americans were merely living a false lifestyle prior to 2008. They were purchasing homes which were far beyond what they could afford to pay on their real income.
    They purchased these homes thinking that they could always sell them at a much higher price before their interest rates ballooned. They also went out and purchased the latest gadgets on the market with the credit cards that were sent to them on a weekly basis. Easy credit made it appear that the better lifestyle was possible for even those who made very little money.

    The period of easy credit for most Americans is over and it will not be returning any time soon. Hopefully, it will never return because it was this period of easy credit for everyone which led to the economic crisis we have been experiencing for the last three plus years. If Americans today want to aspire to live a more affluence lifestyle, great. Now though you have to actually go out and earn the money to live this way. You are no longer going to be able to charge your way to a better lifestyle.

    I have faith that America will come up with solutions to the economic problems we face today, because we have always found ways to resolve the issues which have confronted us throughout our history. I just hope that access to easy credit in America is gone for good. Because if it returns, we will be going through this exact same economic mess a few years after the credit markets ease too much.
     
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  28. Eshlemon

    Eshlemon Well-Known Member

    :lol: Took longer than expected for somebody to blame Reagan. And of course I'm sure Europe blames Reagan for the deindustrialization in Europe which started before ours and Japans over the last 20 years. Deindustrialization started before Reagan. In the 70's autos, electronics, and cameras...Fujifilm...and Kodak is bankrupt today although there are many reasons for that than new competition in the marketplace. Not that there was any deindustrialization during Reagan in the 80's...or in the 90's...or 2000's...in electronics, computers, appliances, textiles, etc. Global open markets development has been around since our beginnings and then when we where the ones taking jobs from Europe. And our (and others in the developed world) "solution" to keep the standard of living and growth increasing over the last 30-40 years by using debt is reaching its limit.
     
  29. FinSane

    FinSane Cynical Dolphins Fan

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    Its neoliberalism, which began in the mid-70s and was pushed harder by the Reagnites, and continued by Bush 1, Clinton, Bush 2, and now Obama. Neoliberal economic policies are bipartisan.
     
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  30. padre31

    padre31 Premium Member Luxury Box

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    Yep, Mansion or Mud Hut is where this all ends up, people refuse to realize that along with refusing to realize you can tax the wealthy, every penny, including core wealth, you shall never pay the bill for existing social programs, adding new ones at this point is nearly laughable.
     
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  31. Eshlemon

    Eshlemon Well-Known Member

    We live in a socialist economic world in which developed world mansions must share the wealth with the developing world mud huts. National self interest and protectionism replaced by globilisation for the greater economic global good and international cooperation. But everything has a cost and like you said even if you taxed the rich a 100% the developed worlds can't afford the same domestic social programs as the past or enjoy the same standrad of living and economic growth.
     
  32. Eshlemon

    Eshlemon Well-Known Member

    Reagan had a pragmatism of trade policy and not any absolutionist national policy. If protectionism was best for our country and another, he'd do it. If open markets where, he'd do it. In the 80's it was protectionism and thats what he did. Weird how so many attribute and politicians want to channel their inner Reagan of free trade but don't know what it was...

    http://www.nytimes.com/2008/03/06/opinion/06iht-edlighthizer.1.10774536.html
    Maybe call theme Bu****es, Clintonites, McCainites, or Kennedites? Or since our President is also on the neoliberalism for the next decade Obamamites.

    http://tech.mit.edu/V128/N51/chomsky.html
    http://isteve.blogspot.com/2008/07/reagans-protectionism.html

    http://www.trivisonno.com/ronald-reagan-was-a-protectionist


    Free traders hated Reagan...

    http://mises.org/freemarket_detail.aspx?control=489
    http://mises.org/freemarket_detail.aspx?control=488
    http://americaneconomicalert.org/view_art.asp?Prod_ID=1134

    http://hnn.us/articles/18301.html
    The bolded above best represent Reagan IMO. Political rhetoric is funny, Reagan gets hailed as the the great free trader and de-regulator when he wasn't.
     
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  33. williamcollins

    williamcollins Banned

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    Good One
     
  34. Sethdaddy8

    Sethdaddy8 New Member

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    The fact that it costs 2k a month for food and vitamins for my family of 4 and a half, lends that something ain't right.
     
  35. Dol-Fan Dupree

    Dol-Fan Dupree Tank? Who is Tank? I am Guy Incognito. Club Member

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    Thanks Tea Party!
     
  36. finyank13

    finyank13 Reality Check

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    reduce the number of mouths to feed.....
     
  37. padre31

    padre31 Premium Member Luxury Box

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    This is one of the reasons why I think home gardening will increase even further in popularity.

    Basically, cost of living is rising, incomes are not, putting the squeeze on family budgets and there does not appear to be much going to change anytime soon.

    So Americans will have to find their own carve outs.
     
  38. padre31

    padre31 Premium Member Luxury Box

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    Insert horse laugh>>>>>>>>>>>here<<<<<<<<<<

    See, the "Real" free trade guy was wait for it..Bill Clinton.

    Americans can be so pathetically short sighted I can only chuckle, to this day some worship Clinton, but forget things like NAFTA and GATT (among other treaties), which took any real power out of the President's hands and placed it into unelected bodies to handle trade disagreements.

    When Clinton wasn't busy allowing US companies to engage in teaching the ChiComs how to build better nuclear weaponry, he signed a deal with them that more or less means they can do business here and offshore their profits.

    I find it all quite sad actually, I suspect this is why the portrait of Machivelli on the Prince features him with a smirk, he knew how malleable, and gullible, people behave.
     

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