Also, the comments about college grads income not keeping pace is scary also. The steep rise in education costs is spiraling and the ROI of the time and money is slowing fast may leave many people to question whether it is worth it anymore. Then mix in high energy, food, real estate, etc costs and you have the makings for a fierce correction that puts everyone back in to reality.

UGH…

-SoCalWatcher

How dare Etrade cut into precious Battlefield 2 time. But you are doing the right thing by saving and investing prudently. There is a video online of Ron Paul grilling Big Ben about inflation and the negative savings rate. Amazingly, Ben agrees with everything but kind of leaves the question dangling. You almost feel like yelling “then what are you going to do about it?!”

@mikey,

We’re already heading to a market bust because Wall Street is looking at the numbers and the assets tied to many securities, and are scratching their heads wondering how low it will go. Again, this monthly nut mentality is problematic. I’ve seen 72 month car loans becoming more standard. $40,000 for a standard car with basic upgrades? But hey, only $600 a month. Even if the rate was zero percent, it’ll still be $555 a month. At a certain point you realize the underlying asset is not worth the drawn out price simply by convenient monthly payments. Death by a thousand cuts.

@hiphopapotamus,

It’ll be interesting to see in Q3 and Q4 of this year if Alt-A will stand the test of a decling market. If significant weakness is sensed, we will be heading toward a recession in a few subsequent quarters. Not the end of a world but a painful contraction.

@calhousing,

I’ve never seen housing divide so many people. We have a culture of those that are financially prudent (a minority – stats show this) and a majority of conspicuous consumers. Like you mention, many folks driving around in leased exotic cars without a cent in a 401(k) or savings account. I know many people that “upgrade” their car each year or two and pay ridiculous lease fees simply to have the latest model. You can buy a nice exotic used car for a good price. But they are addicted to the new.

Have you heard this line? “I have no idea how I got into $10,000 of credit card debt. I was buying only necessities…” You know the line. I always wonder how people in the depression bought things without credit. Oh yeah, they spent out of what they earned! Such a novel concept but in the last decade, paying to buy something out of savings is seen as odd and old school.

@joe,

Love that incident. The market freaked on his words with Maria. If anything, it shows how dependent our economy is on cheap credit that even a slight hinting of tighter policy sent the market down. Now after that scar, he is filling AGs shoes well by saying lots but not really saying anything. “Rates will go up if rates will go up. If they don’t they will go down after going down. If they don’t move, they simply won’t move.” Welcome the new era of financial LaLa land. I wonder how he’ll deal with a collapsing dollar, rising inflation pressures (even though the CPI is absurd anyways), and a declining housing market. Not exactly an easy place to be.

What did you expect Bernanke to do besides the double speak? Greenspan was the same during his time.

I think Bernanke learned his lesson on not to open his mouth too much after the whole Maria Bartiromo on CNBC thing a couple months ago.

Keep up the good job on the blog. Loving it.

Hmmm… muahahahaha