The Savings-Rate Myth (Bogus assumptions based on a bogus government statistic)

NRO Financial ^ | Dec 23, 2004 | John E. Tamny

[Toddsterpatriot]

Should the resale value of the car be counted as savings by the government?

No.

(This is a carry over mind you, when this began it was about houses not cars)

Actually, it started when you claimed Americans are over leveraged. What did you base your assertion on?

[Toddsterpatriot]

An asset at zero does not have a positive value.

Please give me a list of assets at zero.

[x5452]

Enron stock for instance.

It was an asset, it is now worthless.

[expat_panama]

An asset at zero does not have a positive value. It has literally 'no value' it ceases to be an 'asset'.

Rush was just mentioning how the Democrat press is trying to spread the old "America's unhappy" lie.  That's old news.  What amazes me is how many voices on this forum are singing the same song.  

It is true that fed stats on saving are down (fed econ definition:: savings =  income - consumption).  It's also true that America's privately held wealth (in inflation adjusted $) has quadrupled in the last half century and is now soaring to an all time high.

Americans can be accused of many things, but to say we aren't amassing extraordinary wealth is a lie or just down right crazy.

[1rudeboy]

Let's say a car has a scrap value of $25.00. If the bank repossesses it because of an outstanding loan balance of $100.00, the cars value is, you guessed it, $25.00 to the scrap dealer (seeing that he's willing to spend $25.00 for it), and $-75.00 to the bank.

[x5452]

Americans ARE overleveraged. And further they are overleveraged to largely foreign owned banks.

Should the resale value of a primary residence be counted, independant of the expenses on the house as savings without proof of the status of it's value?

[Toddsterpatriot]

How about cars at zero?

[expat_panama]

Enron stock for instance.   It was an asset, it is now worthless.

So it's not an asset and it's not on the ledger.  Only possessions that do have value are listed as assets.  We have $50trillion more in assets than we have in debt.  That's good.

[Toddsterpatriot]

Enron stock for instance. It was an asset, it is now worthless.

Wrong, again. It's getting to be a habit.

Last traded at 10 cents.

[x5452]

"amassing extraordinary wealth".

In what? Stock?

The problem Enron employees ran into was they invested heavily in Enron's stock, which was tied to enron's business.

This is the same problem American's have. They are over invested in American stock, which is tied to American business.

Do no confuse holdings with wealth.

[1rudeboy]

And further they are overleveraged to largely foreign owned banks.

Oh no, here we go. So these cars that are liabilities will be repossesed and shipped to a vault in Dubai?

[1rudeboy]

Ouch. Thanks for reminding me that I shouldn't have taken that cash advance at 20% from my Visa card to buy Enron stock. [chuckle]

[x5452]

On the OTCBB?

You realize when it's eventually delisted (as it will when all is said and done) you can do absolutly nothing with those shares right? They cease to exist after reorganization.

[x5452]

Those who lost their shirt in the depression were somewhat less chipper than you.

[Toddsterpatriot]

Americans ARE overleveraged. And further they are overleveraged to largely foreign owned banks.

Based on what, your feelings? How about some facts from someone more credible than you? You know what a fact is, right?

Should the resale value of a primary residence be counted, independant of the expenses on the house as savings without proof of the status of it's value?

Proof of value can be estimated by similar houses recent sales. Are you saying we should ignore the $19.1 trillion in household real estate? Can we ignore the $8.2 trillion in home mortgages too?

[x5452]

Only though fuzzy math and bad accounting.

[1rudeboy]

Damn, and Cro-Magnon man wasn't very bright on his future either, but things worked out.

[Toddsterpatriot]

You realize when it's eventually delisted

Somewhere over the rainbow. Sorry, sometimes I just break into song.

It's worth money now, it is an asset. Thanks for playing.

[1rudeboy]

This is the same problem American's have. They are over invested in American stock, which is tied to American business.

Any investor anywhere, that puts all his eggs in one basket has a problem. Your comment is so broad as to be essentially meaningless.

[expat_panama]

Americans ARE overleveraged. And further they are overleveraged to largely foreign owned banks.

That's not true of average Americans.  Your error could be caused by a number missteps.  One possibility is that you're relating anecdotal or personal experiences in which case, we can't help you.   Americans on average, have a lot more in the black (on the plus side) than ever before.   

Another possibility is that you're confusing public debt (or the national debt) with private debt.   It's true that the bite that public debt took out of private wealth rose during the 'malaise days', but for years even that's been going down.