Archive for December 4th, 2012

Study: Median Net Worth Plummets To 43-Year Low

Here’s some bad news you may not have heard about…

The median net worth of U.S. households fell to a 43-year low.

Some mainstream media outlets are talking about the findings of a recent study conducted by New York University economics professor Edward N. Wolff. From his paper’s “Abstract”:

In this study, I look at wealth trends from 1962 to 2010. The most telling finding is that median wealth plummeted over the years 2007 to 2010, and by 2010 was at its lowest level since 1969. The inequality of net worth, after almost two decades of little movement, was up sharply during the late 2000s. Relative indebtedness continued to expand during the late 2000s (2007 to 2010), particularly for the middle class, though the proximate causes were declining net worth and income rather than an increase in absolute indebtedness. In fact, the average debt of the middle class (in real terms) plunged by 25 percent. The sharp fall in median net worth and the rise in its inequality in the late 2000s are traceable to the high leverage of middle class families in 2007 and the high share of homes in their portfolio. The racial and ethnic disparity in wealth holdings, after remaining more or less stable from 1983 to 2007, widened considerably in the years between 2007 and 2010. Hispanics, in particular, got hammered by the Great Recession in terms of net worth and net equity in their homes. Finally, young households (under age 45) also got pummeled by the Great Recession, as their relative and absolute wealth declined sharply from 2007 to 2010.

(Editor’s note: Italics added for emphasis)

Dr. Wolff’s entire paper (.pdf file) can be accessed via an Association for Public Policy Analysis & Management (APPAM) website here.

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Tuesday, December 4th, 2012 Housing, Main Street, Net Worth, Recession, Wealth No Comments

Project Prepper, Part 5: Mayan Apocalypse Detour?

The past couple of days, I’ve been watching quite a bit of “doomsday”-related TV on the National Geographic Channel and on H2.

Even though I don’t buy into the whole December 21, 2012, end-of-the-world thing, it was still depressing to watch. And this is coming from someone who (I think) is rather good-spirited in nature.

I have to be in order to blog about a lot of the material I do.

At one point in this “doomsday” TV show viewing marathon, I started questioning myself and wondered if perhaps I should go on a buying spree for supplies before the Mayan 13th b’ak’tun runs out.

It wasn’t an apocalyptic event I was worried about as much as the action(s) of some nut-job(s) making life for the rest of us more “difficult.”

But that’s a danger we face on a daily basis, so after weighing the evidence at hand regarding a Mayan Apocalypse occurring on December 21, I decided against taking a detour from Project Prepper by doing some “panic buying.”

Still, a lot of people are worried about this date. Remember that Reuters/Ipsos “end times” poll I blogged about back in May? One of the findings was that 12 percent of Americans surveyed agreed with the statement “the Mayan calendar, which some says ‘ends’ in 2012, marks the end of the world.”

“12 percent.” As percentage of the U.S. population in 2011, that’s approximately 37.4 million Americans who might agree with that statement about the world ending in a couple of weeks.

Well, that probably helps explain some of the shortages I’ve been seeing with prepper/survivalist-related gear and supplies.


“Preparing For Mayan Doomsday”
ABC San Diego Video

The fear of this date extends beyond our borders. Remember my post about Pic de Bugarach, a mountain in southern France, back in March, and how some believe aliens waiting in a spacecraft inside the mountain will save all nearby humans from the Apocalypse on December 21? Well, The Sun (UK) reported the following on November 16:

A FRENCH village has banned a Doomsday cult from heading to a “mystical mountain” that followers believe will save them from extinction…

Bugarach mayor Jean-Pierre Delord said his village of just 200 people had now become “overrun with esoteric weirdos” hoping to survive in six weeks time.

He said: “The mountainside is swarming with hippies, many of them naked, who drop litter and make a mess…

Regional prefect Eric Freysselinard has now issued an order barring anyone from climbing the mountain, in the foothills of the Pyrenees, on “Doomsday”.

He said: “It will be closed off for three days before and two days after the world is supposed to end.”

“Sorry about my litter. Save the Earth.”

Even the Russians are concerned. Ellen Barry wrote on The New York Times website this past weekend:

There are scattered reports of unusual behavior from across Russia’s nine time zones.

Inmates in a women’s prison near the Chinese border are said to have experienced a “collective mass psychosis” so intense that their wardens summoned a priest to calm them. In a factory town east of Moscow, panicked citizens stripped shelves of matches, kerosene, sugar and candles. A huge Mayan-style archway is being built — out of ice — on Karl Marx Street in Chelyabinsk in the south.

Despite such incidents, I still haven’t seen any definitive evidence pointing to the end of the world on December 21. In fact, as a result of all that TV, I’m now aware of other Mayan calendars suggesting life will go on after this date.

As such, there’ll be no mad rush for Apocalypse supplies on my end.

See you at the December 22 post-doomsday fire sales?

Sources:

“Officials ban doomsday followers from French village.” The Sun. 16 Nov. 2012. (http://www.thesun.co.uk/sol/homepage/news/4648192/bugarach-bans-doomsday-followers-from-village.html). 4 Dec. 2012.

Barry, Ellen. “In Panicky Russia, It’s Official: End of World Is Not Near.” The New York Times. 1 Dec. 2012. (http://www.nytimes.com/2012/12/02/world/europe/mayan-end-of-world-stirs-panic-in-russia-and-elsewhere.html?pagewanted=1&_r=0). 4 Dec. 2012.

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Dennis Gartman: Be Careful Buying Gold Coins

Quite a bit of turmoil in gold futures this morning. From the MarketWatch website:

Gold prices dropped below the psychologically important level of $1,700 an ounce Tuesday, with the selloff triggered by short-selling in Asia.

February gold fell $23, or 1.3%, to $1,698.10 an ounce on the Comex division of the New York Mercantile Exchange.

It touched a low of $1,692.60.

Oh well. That’s “paper” gold for you. And from what I understand, it’s not as if the fundamentals for investing in the precious metal have abruptly changed.

I did come across an interesting CNBC video this morning though about gold coins. Dennis Gartman, who’s been publishing daily commentary on the global capital markets in The Gartman Letter since 1987, spoke to CNBC’s Fast Money last night about Main Street “piling into gold” recently, and warned about the pitfalls of buying gold coins:


“Beware This Gold Trade, Dennis Gartman Says”
CNBC Video

While I agree with what Dennis had to say about being careful when buying gold coins, I’m not sold on his gold forecasting abilities.

(Editor’s note: I am not responsible for any personal liability, loss, or risk incurred as a consequence of the use and application, either directly or indirectly, of any information presented herein)

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CoreLogic: Home Prices Up Year-Over-Year, But Not Around Chicago

There’s been a lot of talk lately about a supposed recovery in the U.S. housing market.

Fueling such chatter is a report released earlier this morning from Irvine, California-based real estate analytics and services provider CoreLogic concerning home prices. From their website:

CoreLogic (NYSE: CLGX), a leading provider of information, analytics and business services, today released its October CoreLogic HPI report. Home prices nationwide, including distressed sales, increased on a year-over-year basis by 6.3 percent in October 2012 compared to October 2011. This change represents the biggest increase since June 2006 and the eighth consecutive increase in home prices nationally on a year-over-year basis. On a month-over-month basis, including distressed sales, home prices decreased by 0.2 percent in October 2012 compared to September 2012…

I noticed the following in the “Highlights” section of this latest report:

Including distressed sales, the five states with the greatest home price depreciation were: Illinois (-2.7 percent), Delaware (-2.7 percent), Rhode Island (-0.6 percent), New Jersey (-0.6 percent) and Alabama (-0.3 percent).

Once again, Illinois is number one on a list you don’t want to be at the top of.

Reuters (with Chicago Tribune real estate reporter Mary Ellen Podmolik contributing) published the following on the Tribune website this morning as it concerns CoreLogic findings for the Chicagoland area:

In the Chicago area, October home prices fell 2.3 percent compared with a year ago and were down 1.1 percent since September.

Down 2.3 percent year-over-year? No recovery here.

Interestingly, I noticed the following uttered twice in the piece:

Excluding distressed sales…

Followed by prices rose or were up.

You don’t say?

Is it just me, or does excluding distressed sales skew home price calculations to the upside, making the housing market look better than it really is?

You can read the entire CoreLogic report on their website here.

Source:

“CoreLogic: U.S. home prices show biggest annual gain since June 2006.” Reuters. 4 Dec. 2012. (http://www.chicagotribune.com/business/breaking/chi-corelogic-us-home-prices-show-biggest-annual-gain-since-june-2006-20121204,0,5529349.story). 4 Dec. 2012.

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Tuesday, December 4th, 2012 Housing, Recovery No Comments
Survival And Prosperity
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Christopher E. Hill, Editor

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