Can't afford food? eat EQUITY
November was the seventh month in 2005 that Americans shelled out more money than they took in; "the first such occurrence since the Great Depression."
"If we can believe the numbers, personal savings in the United States have practically disappeared," former Federal Reserve Chairman Paul Volcker wrote in an ominously titled opinion piece, "An economy on thin ice," in April.Wow! That sounds pretty ominous. But apparently, others at the Federal Reserve think it's a piece of cake:
"A lot of the psychology of savings is that you're prepared for an emergency," said economist Tim Kane with the Heritage Foundation in Washington. "And if your house is worth 10 percent more, then you feel you're prepared.''So if you can't afford food, they say, try eating equity IF you can tap into it before the housing bubble bursts. Now, if it crashes, all bets are off.
Federal Reserve Board member Susan Schmidt Bies . . . conceded that household debt had grown twice as fast as after-tax income between 1999 and 2004, helping drive down the savings rate. [euphemism for 'accelerating DEBT rate'] But Bies noted that household net worth has soared, driven by rising home prices coupled with stock market gains. [both colossal illusions]
In a sense, the American home has become the proverbial cake that consumers can have and eat as well.
"Consumers want to borrow, tapping the equity they have in their homes," said Leggett, the American Bankers Association economist. "We have really figured out a way of banking to free up illiquid assets so they have greater liquidity."
I never advocate violence, but figuratively speaking, it seems that some of these people need a knuckle sandwich to bring them back down to earth.