Monday, October 6, 2014

2010 to 2013

Moral: Wherein we weigh in, rationally.

Federal Reserve Bulletin, September 2014 (Vol 100, No 4 - pdf) has some juicy tales to tell. We'll just look at one and give our explanation. This Fed report looks at results from the triennial Survey of Consumer Finances (SCF) and provides us with their interpretation.

Nice. In fact, one section mentions "saving" (which is not a foreign concept - have we, perhaps too much, stressed the maltreatment of those who save? Not!). See Box 4 which looks at "Saving Behavior" and shows what we would expect. The more one makes, the more one can save. The less one makes, the less the savings.

Moral-oid: The less one makes, the more important savings are; too, playing the ca-pital-sino with one's hard won savings is not rational at many levels of these levels of income.


There will be plenty to talk about in this report. First, though, let's remember that the 2010 SCF showed declines from 2007 for most. We will have to go back to look at that. And, we will relate what we see, to boot, to our start (August, 2009).

I pulled Table 2 out (see image) from the report. Now, some things strike me immediately (if it is not apparent, my interpretation will differ from that of the Fed Res -- and, my viewpoint is well-founded in both theory and practice and experience).

Please, look at the second grouping ("Age of head (years)"). Then, consider the age groupings. For one, "75 or more" represents the class of those who have been "flayed" by the policies of late. These are those who cannot use the ca-pital-sino, except in a limited sense, in a reasonable fashion (look, the majority of those in financial services/consulting - advisors? - need a lesson in "near zero" as part of their training). Many of this group who did try the ca-pital-sino lost and could not recover.

So, "75 or more" had losses from 2010 to 2013. Guess what? That is on top of what they had already lost from 2007 to 2010. If you look at the Fed's actions in supporting the fat cats, you ought to see that they need to understand the need for "stable" means to manage one's "wealth" (lots to talk about there, too). And, "stable" would cover much more than those age-sensitive strategies that we see touted so much.

But, notice, too, that the age groups of "45-54" and "55-64" also lost. An in-between group gained. Methinks that these are those who could delay their retirement (the inflated 401k types - virtual money, except many of these (early takers) will be able to get their little bit of gain - most will not).


Enough for now. The report is worth a read or two (see above link). I am thankful that the Fed does this type of analysis on a regular basis.

Remarks:  Modified: 10/06/2014

10/06/2014 -- Banks proved themselves untrustworthy in this last downturn. Of course, they were bailed out; but, many who felt the ramifications of their misdeeds (said to be stupidity therefore not illegal - but, immoral?) were never compensated. Consider please. With the troubles of the cloud, and bankers, like Chase, being hacked, are we not in a worse situation than 2007 (thereabouts)? There is still much to discuss about computability (and beliefs thereof).

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