Home » Posts tagged 'home equity'
Tag Archives: home equity
Fear The Smell Of (Monetary) Napalm In The Morning
Fear The Smell Of (Monetary) Napalm In The Morning
Via ConvergEx’s Nick Colas,
Warm up the choppers and put some Wagner on the loudspeakers – “Helicopter money” is a hot economic topic.That’s where central banks print money and either hand it to the government for things like infrastructure investment or just send it out to consumers to spend. While that may sound like an extreme measure, advocates of this novel approach argue that it is a valid response to an extreme problem: slowing global growth and central banks with no “Standard” tools left in the shed.
But would it work? There are two real-world examples in the last 15 years that offer some clues: the 2001 and 2008 tax rebate checks mailed to millions of Americans for up to $600 (2001) and $1,200 (2008). Studies by the National Bureau of Economic Research done in the wake of both events show notable differences.
- In the first “Drop” (mid 2001), recipients reported spending most (53-73%) of their windfall.
- In the second (early 2008), the percentage dropped to one third and most recipients reported saving the cash or using it to reduce debt.
The key lesson here: if policymakers are considering “Helicopter money”, they need to have the choppers in the air before a crisis hits. After that, it is too late.
The world’s central bankers are apparently out of ideas for how to stimulate the global economy back to health. Low interest rates? Check. Zero interest rates? Check. Buying bonds to lower long term interest rates? Big check. Negative interest rates? Ditto. If monetary policy were a theme park, we could safely say we’ve been on every ride in the whole place.
…click on the above link to read the rest of the article…
Confusions, Delusions, and Illusions
Confusions, Delusions, and Illusions
Two recent surveys, along with numerous other studies and data, reveal most American households to be living on the brink of catastrophe, but continuing to act in a reckless and delusionary manner. There have certainly been economic factors beyond the control of average Americans that have resulted in real median household incomes remaining stagnant for the last 36 years. The unholy alliance of mega-corporations, Wall Street and bought off corrupt politicians have gutted the nation of millions of good paying jobs under the guise of globalization, while utilizing debt, derivatives and financial schemes to enrich themselves. The malfeasance of the sociopathic privileged class does not discharge the personal responsibility of citizens for living within their means. A lack of discipline, inability to delay gratification, failure to understand basic mathematical concepts, materialistic envy, absence of critical thinking skills, and a delusionary view of the world have left the majority of Americans broke and in debt.
The data that captured my attention was how little the average American household has in savings. Roughly 62% of Americans have less than $1,000 in savings and 21% don’t even have a savings account, according to a new survey of more than 5,000 adults conducted this month by Google Consumer Survey for personal finance website GOBankingRates.com. This dreadful data is reinforced by a similar survey of 1,000 adults carried out earlier this year by personal finance site Bankrate.com, which also found that 62% of Americans have no emergency savings for a medical crisis, car repair, or unanticipated household expenditure.
The fact is these are not highly unlikely scenarios. They happen every day as part of our routine existence. Everyone gets sick. Every car eventually needs new tires or an engine repair. Every home will need a new hot water heater or roof at some point. It is foolish and short sighted to not expect “unexpected” expenditures.
…click on the above link to read the rest of the article…
