This Economy Is Ruined For Everyone

Wolf here: occasionally I highlight comments that add a different angle or flavor or an illustration or more depth to an article published on Wolf Street. This comment by “Desertmer” is in response to This Chart Is a True Picture of What’s Dragging on the American Economy

We are a one-income family with a professional income and a very safe job. I am a woman with two degrees who chose, when my kids were born, to stay home with them fulltime and who never wanted to get back into the corporate world. No one is laying off my spouse or will be.

We have a son in college – a large expensive state school with an excellent rep in the East – graduating next year. Our daughter is graduating in December after many years in school with an MA and a PhD and a lot of papers published and with excellent peer reviews and substantial lab and supervisory experience as well as the boffo computer skills required by her field (it is not a STEM field however).

We, the parents, have dramatically cut back our spending in order to be available to help our kids. First we pay all four-year college costs so our son and daughter will have no loans for that. Lucky we have an income that easily allows us to do that. But our daughter insisted on taking charge of her own grad school (MA and PhD) and has approximately $100K in loans now. She is ABD and so eligible for professorships. And, with this great and growing economy, she has had little luck in finding a full-time job with benefits job in her field, at least so far.

She is adjuncting full time at two premier private universities where tuition costs above $45k a year, but she is making less in total than she would make as a full time waitress in a nice restaurant…. Let that sink in. That is the real America now folks. And she actually waitresses on the weekends as well.

Her health is starting to suffer. Lucky that we pay through the roof for a good health policy, and have been since she fell off our excellent insurance (pre ACA )at 22. She has a spinal condition that requires expensive care and the uni policies available were too basic.

The point is: you do not have to be anywhere near ‘low income’ or have an insecure job to not be spending.

We have a reasonable good upper middleclass income and have never had a problem buying what we want, taking our kids abroad every year when they were young or buying cars or houses or pools etc. until the last few years when we looked at what was going to greet our kids when they were out in the world starting their lives and decided it was necessary to stop all unneeded major expenditures (and an awful lot of minor ones as well, like eating out) in order to be ready to assist our kids if needed.

We had every intention of buying a smallish beach house strictly for our family to use (no renting) as we are not all that far from a coast. We can afford the prices – not an issue. But we are not going to do it – likely ever now – unless things turn around dramatically. Just in case our kids have a financial crisis, we want to be liquid.

We are not doing our usual regular car replacement either and instead are keeping the ones we have. We are not vacationing on our usually two-each-year cycle, just in case. Our daughter is marrying next year. We are not having the blowout wedding we all always hoped for at our daughter’s request because she says she may need our help in other areas. Our soon to be son-in-law is a dedicated and nationally recognized teacher… in a very low income school and even with the extensive recognition, his job is on the bubble every year. And of course his pay is abysmal. They despair of ever buying a home and are also worried they will not be able to afford even one child and the associated costs.

I bring all this again around to my main point. Not everyone who is not spending is ‘poor’ or ‘low income’ or uneducated. This economy is ruined for everyone, and sensible people are altering their behavior at all income levels in order to be ready for what may happen. For example, Golf club memberships at our private and may I say prestigious club are being turned back at a staggering rate and not because of age or job loss but from uncertainty. Ours is going to be next at the end of playing season this fall. We just cannot justify it despite the fact that we play every weekend, and I play during the week nearly every day.

This country is in serious, serious trouble and the financial powers that hold sway as well as our government policy makers better get their sh** together and actually see what is going on, on the ground and in real families, and take action or we are going to be a banana republic before the end of this decade…. By “Desertmer” is in response to This Chart Is a True Picture of What’s Dragging on the American Economy

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  72 comments for “This Economy Is Ruined For Everyone

  1. NY Geezer says:

    The financial policy makers are collectively the big international bankers, the big international corporations, the FOMC, and the other central banks. They have no concern about the welfare of the middle class in the United States or anywhere else in the world.

    Cheap labor combined with almost unlimited credit and debt for anyone who wants to purchase anything is their solution to the loss of middle class income and purchasing power.

    • John says:

      The Neocons & Eric Holders Too Big Too Jail created this Bizarro World that we all live in now.

      Both parties went along with 20 years of deregulation greenspan for their favorite corporations, wall street & the banksters. Did away with Glass Stegal & all the rules & regulations FOR THEMSELVES.

      Obama’s campaign promises to:

      1. Prosecute Wall Street & Banksters for fraud & corruption – Didn’t happen
      2. Prosecute Neocons for Iraq War Crimes – Didn’t happen
      3. End NAFTA/CAFTA & bring back high paying jobs – Didn’t happen
      4. New 911 Investigation – Didn’t happen
      5. ETC, ETC, ETC

      Quit blaming the common working man for America’s & the World’s problems – Its Management who is to Blame & the news media cheer leads & covers up for them.

  2. g kaiser says:

    I think this is going to be the new normal. I for one, don’t mind. I keep stuff, repair stuff and spend far less than I make. I have always done that. The trouble is I find I have to make moral compromises to try and keep earning what I used to. Like selling cheaper machines from China, rather than the expensive ones from Europe.

    I am a stubborn person, and I thus sell much less than I used to, I stare in disbelief at the American stock market, the price of gold, the inane ideas thrown around by the idiots in the EU and America and the public service that tries to fleece me for increasing amounts.
    Something is not right. Our personal freedom gets curtailed, group-think is in and independence is actively suppressed. What I can see mathematically can’t hang together, – does -, and all are heading unthinkingly in the same direction.
    I think I have all problems sorted, yet I sit with my savings making a rotten loss, while the idiots are making double digit returns. I am sure what will happen, but I am damned if I can see when!
    In the meanwhile, I try and stay sane!
    Easier said than done ;-)

  3. Larry says:

    I am sorry but reading this article made me feel like I was on drugs.

    The economy was never designed to support such an easy life. No one should feel like an expensive college with no loans, amazing healthcare, a beach house and a membership to a private golf club should be normal.

    Even if the economy was blazing you shouldn’t be able to have those things so easily and without sacrifice.

    This article is terrible and shows why the fed has such low rates. I think Wolf allowed a reader to get the best of him.

    • Jungle Jim says:

      Your response to the article leaves me absolutely baffled. The writer’s point was that even the well-to-do are worried and cutting back. They are cutting back on their discretionary spending, such as golf, which can easily be sacrificed. Such cut backs do have a downside for the people who make sporting goods. For them the cut back is not painless.

      However for those who are not well-to-do, the realities are much harsher. For many people, discretionary spending is now out of the question. What money they have goes for food and shelter. Those are hard to cut back on.

      The claimed recovery in hiring is a farce. The jobs being created are largely part-time, minimum wage, and no benefits. I am amused by the claim that businesses can’t find workers. What rubbish! They can’t find workers because they pay so little. It is said that we are short many thousands of truck drivers. Who wants to be a truck driver for what they are paid today? Who will spend the money to develop high-end computer skills when the available work consists of low-end contract positions?

      At the same time our “leaders” at the Federal Reserve lie flagrantly about inflation. They use a jerry-rigged calculation that is designed to avoid tripping COLAs, while ignoring basic costs such as food. And anyone who thinks food is not going up hasn’t been to the store lately.

      • Miggy says:

        I can’t vouch for Larry’s response but everybody already knows what you are saying. When you say for those that are not as well to do the realities are much harsher. Most have known this for years, including those at the top of the food chain.

        I am not going to get into my personal situation because my situation means nothing, is not relevant, and nobody cares about my situation as they have their own situation to deal with. Anybody that has read this blog for any length of time understands why things are the way they are because excellent bloggers like Wolf clearly and daily give us the reasons.

        Start with NAFTA, most favored nation status to China and then move to the repeal of Glass-Steagall, mortgage backed securities, the fall of Lehman, Derivitives, and then eventually QE. Learning about these things is the reason we usually read blogs like this one.

        • Jungle Jim says:

          You are certainly correct that none of what I said is new or different.
          Actually, my response was aimed at Larry, only. His remarks seem to imply that things aren’t really bad, and anyone who isn’t doing well isn’t trying hard enough.

        • Sam Lowry says:

          “…and then move to the repeal of Glass-Steagall…”

          The original Glass–Steagall Act established the Federal Deposit Insurance Corporation. It was designed to re-establish trust in the banks after the bank runs of 1929 by ultimately putting the taxpayer on the hook for the bad investments of commercial banks. Part of the Glass-Steagall act was to distinguish between commercial banking and investment banking. The FDIC only originally applied to the former. Glass-Steagall was not repealed. Only the distinction between commercial banks and investment banks was, thus putting the taxpayer on the hook for even more of the financial establishment’s bad investments.

          The solution is not more government regulation. The solution is to eliminate the Federal Reserve and its fiat currency.

        • trinity river says:

          YOU, Sam, are the problem. If you read U.S. history between 1915 and 1935, you will see we are in the same situation now. This is not new. Ferdinand Percora, Glass-Steagall, and the other reforms instituted are what gave us a good economy for a half century.

          No financial regulation has given us back the bad economy. When the financial sector is eating up 40% instead of 20% of our economy, the rest of the economy is in dire staits. We have regulation/rules for everything else in life, only wall street is free to do anything they wish.
          As to the fiat currency, please compare Europe now to the U.S. economy now. You are not reading enough if the facts are not clear.

        • Miggy says:

          Read this Sam. Its much more detail than I have here. The proverbial nutshell: “It was Glass-Steagall that prevented the banks from using insured depositories to underwrite private securities and dump them on their own customers.”

          and thus the spot we are in my friend.

      • Larry says:

        No, I do believe the economy is a hard one, and it doesn’t seem QE and fed policy as well as the lack of political discussion or action has helped at all.

        That is the main reason I found Wolf’s blog and other blogs like his, since he can describe other factors about the economy and such and explain why certain policies are not working or where the money is going to.

        Anyhow, I was hoping for more of a realistic story I suppose. I suppose I was too shocked by the normal expectations of the upper middle class to offer anything more helpful.

        For trying harder, I mostly meant if you want above average results you gotta do more work.

        Though the author pointed out her kids were the ones who were working hard and having the most problems.

        Sadly it seems both of them decided to follow what they enjoyed in life rather then looking for higher wages and higher income ( aka no beach house and golf memberships) (But of course I imagine someone out there thinks it is a normal expectation for low income high school students to afford those things.)

        That type of decision would of course lead them financially stressed and it seems their parents still find them worthy enough to invest in.

        Of course we don’t know the degree her daughter obtained and her bad health is probably a crisis any family would suffer through.

        As for the son he is probably trying to accomplish too much. He might already know how likely the city or state will increase education funding and in today’s economy not very likely. And with no real local support it probably will be pretty tough on him and the school he teaches in.

    • david battabong says:

      My reaction was similar to Larry’s. I just read someone saying “we were wealthy, loved our ostentatious, consume-at-any-cost lifestyle, but now, even though we still have the income of a medium-sized 3rd-world village, we have cut way back because we are also smart, caring, far-sighted individuals and we love our family. Oh, and yeah, the world is going to shit”.

      I won’t cry with her and I certainly won’t applaud. This is old news to thoughtful people and I’m surprised that it found its way into this blog.

    • martin says:

      Wow!! I totally agree Larry. Desertmer was hoping to have a point but oh man, that is NOT an upper middle class income and lifestyle at all. To the majority of real middle class families trying to survive out there, this example of cutting back is “only in our dreams”. I completely understand that the academic income that her kids and the fiance is receiving is very low but that is now the new normal for teaching professionals and yet they decided to choose that particular profession.

      As a fifty-something Larry AND Wolf, I am part of the first generation to have less wealth and economic opportunities than our parents had and I firmly believe that the next generation will be worse off then we are. Desertmer should be happy to be in her position financially but she has a serious decision to make- do you continue to enjoy your later years in comfort or jeopardize your health and piece of mind just to continually strive to keep your kids afloat as long as you can.

      I know what my old man would decide. To heck with you, you can have what’s left of my retirement savings only after I’m gone.

  4. Miggy says:

    Not sure the point of the article.

    • Simon says:

      Miggy – I thought the point pretty obvious. It is not just the ‘low pay’ who are suffering but good/upper middle income earners too.

      • Desertmer says:

        WE are NOT suffering AT All. We have plenty – which I thought came through loud and clear but perhaps I did not make that clear enough! My point, again forgive me for not being clear enough, is that we keep being told that it must be consumer spending that jump starts our economy and nothing positive will happen until people resume spending but it is not JUST the poor or lower income people who are not spending. When people in my economic bracket stop our consumer spending because of uncertainty for – whether our own OR our offspring’s futures – THAT should be a very very bad sign for the future of our economy. If you only have the top one percent of the top one percent spending – how will the economy then improve ? In no way was I ‘crying poor’ or complaining about my own economic circumstance- that would be absurd…..

  5. Archy Don says:

    Miggy: The point of the article is that the economy is in deep trouble. The folks have a state room on the Titanic. Imagine those below deck. Get it? Got it? Good.

    Larry: Nice try at dropping a guilt trip on these folks – who I assume you don’t know personally. “Even if the economy was blazing you shouldn’t be able to have those things so easily and without sacrifice.” There’s nothing in the article upon which you can legitimately base the conclusion that these people have become affluent with ease and without sacrifice. And, your assertion that it “shows why the fed has such low rates” is singularly ridiculous on its face.

    • Miggy says:

      Hey Archy, tell us something we don’t know. My post was sarcastic. Got it?

    • Larry says:

      “There’s nothing in the article upon which you can legitimately base the conclusion that these people have become affluent with ease and without sacrifice.”
      – Archy Don

      “This country is in serious, serious trouble and the financial powers that hold sway as well as our government policy makers better get their sh** together”
      – Author

      That sounds like the language someone who worked very had to get above what most people had would sound like I imagine.

      Didn’t try to guilt trip at all, was just use to realism in this blog and one reason I really enjoy it.

      The rates make sense once you see how high people’s expectations are.

      Of course they don’t seem to have a great affect as was hoped they would I suppose. The whole thing is pretty weird, but that makes reading the blog more enjoyable.

  6. Saint Howard says:

    I have absolutely no sympathy for Desertmer. And neither do the powers that be. If anyone still thinks that the people in charge don’t see the effects of what they are doing, you’re just kidding yourself. They WANT to turn the US into a banana republic, and they’re gonna stick with it until they succeed.

    • REDPILLED says:

      Yep. You got that right! And we are far on the way to becoming history’s largest and most powerful banana republic, especially with NorthCom, Fusion Centers, NSA surveillance, and militarized local police.

      Just wait till the effects of catastrophic climate disaster hit the majority of our fellow citizens in water and food scarcities as well as more droughts, floods, extreme weather, and rising sea levels.

      That’s when the martial law forces mentioned in my first paragraph will be rolled out in force to crush the justifiable outrage for their paymasters in the Plundering Class, who believe they have the lifeboats to allow escape from the sinking Titanic.

  7. Brian says:

    Personally, I find this article incredibly self-serving and arrogant. According to the author, it’s the system that’s letting them down, not their own fallacy. I disagree completely.

    The world is changing as it always does. It’s a different economy than it was in the 80s & 90s. University Degrees are far less valuable than ever before while people who create their own, unique value have never been more valuable. And I’m sorry but your daughter and son-in-law have no unique value for this economy given the increase in college enrollment over the years and the skills that drive today’s economy.

    Obviously your family has believed in the traditional model that has worked for decades: Get a structured education at reputable universities and that will lead to a good job, with benefits, a nice salary, and job security. Well….that’s not reality. Essentially, you guys are candle-makers when the lightbulb was invented. We still need candles but not as many as we once did.

    The mistake your daughter has made is that she is trying to join something that is becoming archaic. Colleges and Universities are over-priced and offer too little value in today’s world to justify that cost. It doesn’t make sense to pay that much for an education when this economy doesn’t value the end degree, that’s just a fact. The number of people who hold a master’s degree has increased by 43% in the past 12 years. When there is an abundant supply of something the price falls. Why should Universities pay more when new professors are a dime-a-dozen. In addition, why should they charge less when enrollment is climbing. Basic laws of supply and demand at work there, something Universities teach everyday. If you want to blame someone, blame the institutions your family has believed so strongly in and given so much money to over the years. Their short-term greed is what will ultimately kill their long-term existence.

    Here’s my advice, take advantage of what works in today’s economy and the advantages it can offer, specifically how technology can help the individual create their own value. Once that happens, then your kids will be in high demand and the money will follow. From there, you get to buy your beach house (that you won’t rent) and remain apart of your private golf club (which is very prestigious).

  8. MathWins says:

    We too are in the position we have to help our adult children and their families. They are hard working, but job pay they are making does not support a family anymore. And I’m not talking frills, I’m talking the basics of a roof over their head, food and clothing, and energy costs. Many of our friends in their 50’s are in the same position, helping children who are out of college with a 4 year degree who are making $15 or less an hour. This is not good for our country.

    • Brian says:

      If you make $15 an hour, it’s because you are worth $15 an hour. And if you are only worth $15 an hour but have $70k in student loan debt, that’s a problem you caused. It’s not an economy issue, it’s a you issue. Create your own value.

      6 years ago I felt for recent grads who came our with large student debt and could’t get a job. Now, I do not. Kids graduating today saw this story before they ever even applied for a loan; yet they still did. They should have adjusted. Instead, they buried their heads in the sand, took out $30k a year in loans for an over-priced education, and now want to complain about the situation that THEY created for themselves. I’m sorry but I have no sympathy.

      • Miggy says:

        Yes and no. Wages have not kept pace with inflation. Not because of the free market but because of central planning which is not free market. The flood of immigrants coupled with offshoring of manufacturing (NAFTA) has kept wages far below inflation. If the planners would have had the United States as first priority it would be like the 50’s and 60’s where a guy could get a good job and support his family with nothing more than a good work ethic and honesty. Unfortunately the New World Order has taken prioritiy.

        I hear the talking heads on the radio give no sympathy for the fast food strikers who are demanding higher wages. Guess what? The large banks were in the same %$#$% position and they got bailed out. Normally I would say let the free market determine wages but we are far from a free market so why shouldn’t minimum wage be skewed just like everything else?

        • Brian says:

          Our economy has many many issues, no doubt. And there is no-end to the rabbit hole we could climb down if you want to analyze every component that has contributed to the issues we face both nationally and globally. But in a form with limited space and a life with limited time, my responses will be kept to the surface-level topic that the above article focuses on.

          Essentially, the article is about student loan debt, current cost of living expenses, and income opportunities for Gen-Y. And the fact of the matter is, too many people today are using an out-of-date model for a career path (get a degree – beg for a job – work hard – trust the institution that gives you a livelihood) and it is an absolute farce of a plan. It makes absolutely no sense to pay anymore than $10k a year in tuition when all the world’s knowledge is available for free on the internet and institutions haven’t paid “new grads” well for over 10 years. At the same time, the people going down this career path are selecting the same tired out fields of study (business, education, law, health) instead of what’s valued in today’s world like Statistics, Mathematics, Agriculture, Technology, Cyber-Security, etc. A college degree is virtually meaningless, especially when it comes with no experience.

          Bottom-line, we are in a economic transition and the student loan debt complaint shows the people who didn’t figure it out in time.

        • Jason L says:

          Yes, a transition to an economy where those who can’t “create value” AKA hire a lobbyist, should just get used to eating catfood.

        • Anonymous says:

          I see your point, and – were I a father – I would give my children the same advice: broaden your horizons, consider some high-paying technical work, consider school abroad, and think very careful about taking on large school debt for anything below the top 5% of professional degrees…

          But if you are trying to offer a viable strategy to the median – that is, mediocre – population, I’m not sure that your disclaimer that this is a limited forum and so you may only deal with the “surface-level” topic makes your argument credible.

          Everybody who chooses to remain in the country has to live under roughly the same economic conditions. Tuition inflation is gross, and problematic to be sure. But the bottom line is, there are too few jobs that pay a living wage, let alone provide a path to prosperity, at the end of that degree. If you can or did get to that path with a high school diploma or GED by creating your own value, then I salute you.

          But a whole generation seeking employment can’t support itself by being hip app-writing techno innovators, anymore than everyone can expect to be a professional athlete or sign a record deal. Behind every one of those talents stands a looooooong line of consumers, and those consumers have to earn purchasing power somewhere.

          Your advice is appropriate to the self-help section of one of our (rapidly going out of business) bookstores. It’s not much of a public policy prescription for dealing with indemic and growing unemployment and underemployment.

          There are better answers, and true leaders with our nation’s best interests at heart would be working on them.

        • Brian says:

          “hip app-writing” is the last thing I would recommend to anyone in this generation. There are many ways to create unique value for one’s self and it doesn’t necessarily have to involve technology. It can be a trade, a service, or a unique knowledge that creates your value. The point is, today’s economy places value on specialist, not people who think like the group. And going to a university and paying to think like everyone else, isn’t making you unique.

          What is the difference between paying $90k for an education that is worth $40k and buying a house for $200k that is worth $150K? Either way, you over-paid by $50k because you didn’t think it through and look ahead. Now, you want to complain about the economy instead of taking some of the blame yourself? I have no patience for that. You’re $50k in debt because you played the game wrong. Sorry about it.

          I got a degree in International Economics and M.B.A. in 6 years (finished in 2008) and the the total cost of my education was $33k. When I finished, I had $8k in student loans. I had no parents paying for my school. And I selected a university in-state that limited my cost. When I started looking for jobs in a completely terrible economy, I was willing to move anywhere and I took the best paying job that would hire me. I didn’t ask myself “what is my dream job?”, “what am I passionate about?”, “what makes me happy?”, “what is my dream city?”, etc. I moved to Baltimore and went to work. Over the last 6 years I’ve limited my exposure to economic turmoil by creating a unique for myself within my industry that’s allowed me to demand higher pay and income beyond my main source.

          As I’ve said, I have no patience for people who over-paid to go to their “dream” school to get a degree in the field that they were “passionate” about and once they graduated, they realize that nobody wants to pay them a high salary for no-experience and a meaningless degree. That is not an economy issue.

          The U.S. economy has many issue, but not paying people a lot of money for very little value isn’t one of those problems.

        • bob says:

          Bob. Right on, Miggy. When JFK was murdered and that dipstick from TX took his place (or tried to) this “most colossal monkey house an astonished world has ever witnessed” (USA) had no future. You could see the very beginnings even way back there. LBJ inherited a budget in balance and a national debt load of “only” a tad over 3 billions. Then came his “guns and butter” crap. Auf wiedersehen!

        • Warren Celli says:

          “LBJ inherited a budget in balance and a national debt load of “only” a tad over 3 billions. Then came his “guns and butter” crap. Auf wiedersehen!”

          And it was the beginning of the biggest intentional divisiveness scam in world history…

          Deception is the strongest political force on the planet.

      • Justin says:

        You’re an idiot.

      • ambrit says:

        Sorry mate, but I’m not buying your blame the victim argument.
        “If you make $15 an hour, it’s because you’re worth $15 an hour.” What utter bollocks! This argument fails on its’ underlying premise; that there is a true ‘free market’ in labour supply. As long as people must earn their bread “by the sweat of [their] brow[s]” this game will be distorted by interests for their own benefit. Today, America is in the throes of a reactionary counter revolution. Radical Conservatives have never been shy about their goal; the repeal of the New Deal Social Contract. That’s one major reason why people are earning $15 an hour when a decent living wage would be $25 an hour. Employers generally have the upper hand when jobs are scarce in relation to the available labour supply. Today, employers can artificially create labour over supply by various means: anti Union agitation and legislation, fraudulent immigration policies (H-1B visas are cheaper than in house training for corporations,) offshoring of jobs that can be filled here, etc.
        Your comment contains a pernicious idea: Adversity builds character. Nothing could be further from the truth. Try hanging out in a hobo jungle or homeless camp for a while, as I have. Poverty and desperation are germinal fields for desperation and criminality, not Sunday School teachers.

      • martin says:

        Hear hear! I keep telling every young person who makes the mistake of stopping to listen to me, do not go to university for that MA or BA because there is NO freaking point. You are better off spending 7K and learning a trade like plumbing or HVAC or electrician. There is no reason to expect a wonderful 80K job at Deloitte and Touche or KPMG, there IS no position there. You will most likely be working in a job that asks “would you like fries with that order”?

  9. j.d. moses says:

    a luxurious suite on the titanic sinks just as deep as steerage. forget the golf, the beach house, the new cars and the other crap and start building yourself a lifeboat. plant a garden and a few fruit trees, learn to preserve food. get out of debt and invest in something that has enduring value such as farmland. join a resilience group and find some like-minded people to teach and learn from. you may as well prepare for the future. complaining about the past and present is a mug’s game.

    • dc.sunsets says:

      The difference between steerage and first class is that passengers in the latter have access to lifeboats.

      The trouble with noticing that a trend is unsustainable is that if you’re very good at doing so, you spend a whole lot of time awaiting the ship to capsize, and during that time you forgo too many opportunities to count (been there, done that, have the t-shirt, blah blah blah.)

      We “preppers” have a confirmation bias problem. We only hear the voices of those who tell us what we already think. Given the multiple paths into the future our reality may choose, over-investing in one expected paradigm renders a person ill-prepared if Reality takes a path not expected. I’m just saying that it’s not as simple as building a lifeboat; instead of a flood, it might be a drought that arrives (metaphorically-speaking.)

    • Desertmer says:

      We are not in debt. At all. We have four acres and a small orchard of apples peaches and plums as well as a large garden which is my hobby. I mentioned I was a ‘stay at home’ mother didn’t I? What did you think I did all day – eat bon bons? I also sew, tutor reading in our elementary school and volunteer at our public library. My husband was taught fine cabinetmaking by his father ( whose profession it was) and has made much or our furniture over the years despite his busy business life. We are plenty resilient thanks. You have apparently missed my simple point regarding consumer spending being the jump start to economic recovery and whom else besides the poor and lower income is NOT spending… My fault. I thought a more complete picture of who we were would illuminate my point not confuse it.

      • Toni M says:

        Your point was perfectly clear to me; it seems people would rather pretend to be dense and ignore the argument about slowing demand.

  10. ThroxxOfVron says:

    The affluent are finally feeling a little pinched in their beach house, doing without their two vacations a year, driving last year’s model and letting the kid’s go into debt to get overpriced educations at elitist institutions?

    Oh the tears and suffering!

    What will the St. Jones think if they cannot keep up appearances?

    • Konstantinos Spigos says:

      Considering the future of economy, it doesn’t matter if we’re talking about golf club memberships or health expenditures. An economy slows down when everyone curtails and saves for a dark future and this feeds back to call for more and more curtailing and saving.

    • Desertmer says:

      Not looking for pity at all. We are just fine. Have you not thought of the people whose businesses we are NOT spending our money with? And the cascading effects of that over the many people just like me? And the resulting effects on the economy as a whole?

  11. Dirk says:

    Move to Chile and look for positions in universities there. You could also consider Singapore and Brazil. That’s where the action is. Also, Don’t forget Australia and New Zealand.
    Good Luck.

    • Lee says:


      Forget it.

      First, the unemployment rate here in Victoria is now at a 13 year high of 7%.

      Second, your overseas skills and education will have to be evaluated and checked to see if they are the equivalent of Australian ones. Even if they are you will find that employers will pick Australian trained workers over others.

      Third, depending on your age it doesn’t matter what your educational background is, what experience you have, or what you know. Once you are over 50 you will have trouble finding a job, once you are over 55 you might as well not even look, and over 60 well too bad sucker. Over 30% of the people here on unemployment are over 50 years of age. But that is beside the point……..once you hit over 40 unless you have big bucks you’ll have trouble qualifying for a visa.

      And last, the cost of living here is very high. You’ll need big bucks to live here. For example, our electricity prices are some of the highest in the world. I pay 33 cents per kWh. Gasoline was US$5.50 a gallon last week. Housing – you haven’t seen anything like it. Just about anything within a reasonable distance of the Melbourne CBD is going to cost you well over A$1,000,000. IIRC the median price of a house here in Melbourne is around the A$600,000 mark. If you want cheap go to Japan.

      • dc.sunsets says:

        The US will soon mirror your comment about age and getting a job. More than any time in memory, people are clinging to jobs they HATE because once your birthday year is (currently) 1964 or earlier, your odds of beating a 30-year-old for a job are almost zero.

        Outplacement counselors now are quite adamant: NEVER put your graduation years on the resume, and be vague indeed about employment history more than a decade old, or else forget about landing an interview.

        PS: I’d love to know what Desertmer’s husband does, where he has NO worries about losing his income. I’ve watched physicians who thought they’d never miss a paycheck get canned, and incomes are falling across the board.

  12. HD says:

    Although I didn’t get all misty eyed when reading that Desertmer realised she and her family would perhaps no longer be able to buy “anything they wanted” (there’s an ecological lesson buried not so deeply in there too), I commend her for sharing her insights.

    Two remarks from a European point of view: I never understood the American free market approach of higher education. It saddles the student with impossibly high debts, while the ROI has become very doubtful of late (as Brian already mentioned). The financial threshold to reputable universities in my country, Belgium, is extremely low by way of comparison, because the bulk of the tab is picked up by the government and hence by the Belgian taxpayer. It is by no means a perfect system, because it also induces the less qualified to “have a go” at a college education and to try again when they fail, making the system way too expensive. But it has its democratic merits and allows for students to finish their studies free of debt, while these same debts are currently suffocating a large part of US graduates, i.e. your next generation work force. At the same time I agree we should start to rethink our educational systems along the lines of future societal needs, because the current system is rapidly growing obsolete now, on both sides of the pond.

    Next up: your health care system, which seems to be excellent for anyone in possession of a sh*tload of money, but quite literally deadly for the poor slob without dollars or a decent insurance plan. No, I’m not here to defend Obamacare, because at first sight it strikes me as an ill-conceived plan that was launched at exactly the wrong moment i.e. when the US could not afford such a grand project. Again, in my country – an astonishingly dysfunctional and highly divided nation, mind you – the health care system is generally outstanding and quite affordable, courtesy (again) of the taxpayer and also because the wages of even our finest surgeons and specialists are modest in comparison to what you pay them in the US. But it means no one has to bankrupt himself when facing serious health issues.

    Oh, and might I add: excellent posts throughout. I’ve enjoyed reflecting on them.

    • dc.sunsets says:

      The European approach to the socialization of things like higher ed and medical services is, obviously, more directly socialistic (and thus has all the “misallocation of resources” warts described as unavoidable in Mises’ 1922 book, “Socialism.”

      The US approach has actually evolved into full Corporatism, something Benito Mussolini would approve of fully. Obamacare simply cemented into legal place the phenomenally wasteful system of “private” medical insurance (which is not insurance in any real sense at all), along with all the millions of paycheck employees in the Medical Industrial Complex food chain.

      College costs 100k plus only because the central government makes otherwise unsecured loans available to naive people (proto-adults and their deluded parents) who spend money on useless degrees like those who buy lottery tickets and daydream of the luxury yachts they’ll buy with “their” winnings. Imagine if the daughter in this guest essay had been given one thousand $100 bills. Would she actually have whizzed it away to the clowns offering her the degrees? Only if she was bat-guano crazy, and couldn’t “do the math.”

      My point? Both the EU and US systems, by interfering with buying and selling in markets (college degrees and medical services) prevent honest pricing and thus honest information about the relative worth of the choices involved, plus they induce VAST misallocation of resources (people’s time and money) making everyone poorer for it.

      • trinity river says:

        When dc.sunsets describes his country’s healthcare, please note that Belgium spends only 10% of GNP whereas the U.S. spends 15+% GNP and doesn’t cover 20-30% of our population. I don’t care what economic system we have if it is effective and efficient. What are we doing wrong?

  13. mike says:

    Not really the parents’ fault as they are just carrying out their biological imperative, but people who subsidize their children are worsening the economy for everyone. Parent subsidies are what has helped drive house prices far beyond affordability.

    Let the kids get on with it. Prices will adjust to their ability to pay.

  14. Benny Profane says:

    Good lord. When I got to the whining about not being able to afford a “smallish beach house”, that’s when I gave up. (That’s an item that probably costs about a million these days near what I presume is the upscale metro this family lives in) Yes, yes, no tacky “renting” for this family. Really. What was the point of this little essay? Are the readers of this blog so insular and non aware of how 95% of most people live day to day, that they were supposed to nod their heads and say, oh, yes, I too am driving my five year old Lexus into the ground, woe is us?

    “No one is laying off my spouse or will be.”

    I really wouldn’t count on that one. The author doesn’t state what her spouse does for a living, but, from what I can see, there are very few jobs, all up and down the spectrum, that are immune from “layoffs”. There’s a lot of downsized Greenwich residents who would agree after ’08. Back in the late 70s and 80s, the upper middle class would just sneer at the poor, “inefficient” working class as they lost their livelihoods in the millions to Japan and then other parts of the third world. Hey, they deserved it, right? Damn unions. Asking so much. Let capitalism flourish! Free markets! Free trade! The world is flat! Well, now it’s flowed up to the upper middle class, to the point that PHDs are waiting on tables and half of all law school grads can’t find a job in the field. And I read this. We can’t take the usual two vacations a year, at least one outside of the US, I presume. Our cars are more than three years old. No beach house. So, now you say that the “economy is ruined for everyone”. It took you that long. Sorry, but, get to the back of the line. And stop whining. Most of the world you drive by with the windows rolled up and the air on has been dealing for twenty to thirty years. We maybe can help advise you on your beach houseless life, if you’re nice, and bring a dish to the cookout.

    • Patrick says:

      I think you missed Desertmer’s point which I read as being – if this can happen to us with the advantages that my spouse and I have, just think of the pain that is being inflicted on those families less fortunate than us.

  15. dc.sunsets says:

    Desertmer is late to the party. My wife and I put our sons through college, but they were told before they even chose schools (or occupations) that it was a deadly serious business and that they were to choose occupations that would leave them able to support themselves AND find the fastest, cheapest way to obtain the necessary qualifications. Three sons, three STEM grads, three “old paradigm” (good) jobs, three self-supporting (ugh) taxpayers.

    Like many, I’ve watched this whole swamp evolve for nigh on TWO DECADES! The writing was on the wall by 1995, but anyone who figured that the 1974/1982 rally in stocks, the economy and general expectations had run its course then was totally steam-rolled for the last 19 years.

    The lesson? Things can (and do) get crazy and stay crazy for so long that a sane person begins to feel like the very last human left in the movie “Invasion of the Body Snatchers.” Today feels totally like it did in 1999 and early 2000 when the NASDAQ shed any Earthly limit (like gravity) and skyrocketed higher, higher, higher, week after week, month after month, and every time it looked ready to roll over, all it did was ROLL OVER anyone dumb enough to short it.

    Desertmer was among the many in the herd living like the uptrend had no end (and at least her daughter absorbed that gestalt.) Only now that her adult kids are being slammed by conditions do she and her husband realize that the Titanic is listing.

    Some of us have been busy for quite some time trying to build lifeboats out of the flotsam left over from the kitchen’s production of yesterday’s feast. The open question is whether we’ll benefit from our foresight or will we just spend more time worrying (and skipping the vacations, the fancy cars, etc.) only to land in the same muck.

  16. gaw says:

    Thanks for opening the site for comments Wolf, as a long time reader, I have always appreciated your analysis.

    So many of the commenters sound bitter about the poster’s status. That is not the point here, from what I can see. Have some cheese with your whine. Typical: “Saint Howard: ‘I have absolutely no sympathy for Desertmer'” – not a very Saintly attitude there, perhaps a name change is in order, try “Whiny Devil” maybe. I favor eliminating the 1% myself, but the author of this post is not in that select group of Banksters and crony-capitalist fascists who are the cause of this Great Recession. Direct your anger at Washington, Wall St and the “elites”, where it belongs.

    The point is that the economy is bad, and people (of all classes) aren’t spending, which for a 73% of GDP “consumer economy” indicates contraction. The more not spent, the worse it gets. Debating about whether that % of GDP coming from consumer spending is a good thing or not is for another post. Some comments have laid out the causes, there are many.

    • Benny Profane says:

      “but the author of this post is not in that select group of Banksters and crony-capitalist fascists who are the cause of this Great Recession.”

      Well, she’s a stay at home Mom (quite the luxury these days), but how do you know that her spouse is not bringing home the bacon from one of these evil endeavors you mention? After all, most who can afford the life she and her family have lived for some time, especially from just one income source, are not free of sin. I would really like to know what the spouse does for a living. Something tells me he doesn’t work on an assembly line or in a store or a fast food palace. Finance? Middle to upper management? Those people have done more than their fair share of damage to our economy for thirty years, walking away with profitable stock options and inside deals.

      • Desertmer says:

        To all who seem so interested – My husband is an Industrial Hygienist and manages a large group of Industrial Hygienists as well as doing extensive field work himself – domestic and international. Sorry – no banksters hereabouts!! Instead his work involves keeping workers safe from toxic exposures in the workplace….

  17. Dragon Spawn says:

    Welcome to the world of Peak Oil.

  18. dc.sunsets says:

    Socionomics in action.
    The herd stampedes in one direction (“we are the world,” “everything is AWESOME!” and buy-and-hold forever making 7% compounded!) until that pendulum has swung as far as it was going to swing, and then the herd spontaneously does an about face and stampedes in the opposite direction.

    We’ve experienced a once-in-three-centuries full-out financial mania, beginning in 1995. It was built on dishonest money, infatuation with electronic gadgets and stunningly naive faith in the power of “experts” (e.g., professional economists, money managers, Ph.D.’s of all stripes) and “science” (which today is not science at all, when people are told that the “science is settled by consensus.”)

    For at least 40 years this has been building, with the blow-off phase initiated in 1995. Since 2000 the herd has desperately supported every cockamamie clownish idea (e.g., deliberate debasement of the money supply via QE) in order to maintain the illusion of prosperity, even as the underlying foundation eroded to dust. All we await is for the spontaneous reversal of the herd, when today’s “wise men” will be suddenly scapegoated for the folly of the herd to have chosen them to follow these many years. We got the system “we” (our benighted neighbors) supported. Charlatans only rise to power when invited to do so by people begging to be lied to.

  19. LeftCoastIndependent says:

    Can’t feel sorry for rich snobs who are losing club membership. There are public courses to play on also. But I do understand their gripe that opportunity in America has come to a halt, especially for young people. We the American people have been sold out for many decades now by our own government. Every President since Reagan has been in on it, so Hillary can just forget about 2016. As a matter of fact, every single member of congress should be replaced. Virginia woke up and told Cantor to get lost. Good job. One down, many to go. But just a word to the Desertmers. I lost my good union job 9 years ago (outsourced) and there have been some major changes in life, but the adjustment ended up being better and I’m more happy. The same can happen to you, but you need to be flexible and willing to change. Try some volunteer work at a hospital or job placement service. That will put everything in perspective. Hate to say it, but just wait till this financial bubble goes bust. And it will. The worst is yet to come. Don’t be a victim, grab life by the horns, be prepared.


  20. LG says:

     And, with this great and growing economy, she has had little luck in finding a full-time job with benefits job in her field, at least so far.
    Seriously?! The economy is not growing ! There are less jobs since the tech bubble. Corporations are closing hundreds of stores laying off thousands of employees. Hiring H1 -B visa holders part time to cut payrolls to meet profits! Housing boom is for the 1%.
    Inflation on all consumer goods plus health insurance rising like flood water the US consumer is done!!! And for the once greatest country, done as well! Hedge accordingly.

  21. cripes says:

    Half of employed Americans make about 30,000 or less. Median household income is about 53,000.
    Does anyone here have any idea the hardships faced by most of the people working in the US?
    Twice a year overseas vacations, beach houses, paying off their children’s college educations so they won’t have debt, high-end health insurance, never worrying about being able to buy things is completely out of reach for the majority in this country.

  22. Sukh Hayre says:

    The problem is, the lifestyle we thought we were entitled to when China was willing to sacrifice its labour for a dollar a day and when the Middle East was willing to sacrifice its oil for $10 a barrel is no longer the world we live in.

    The slave-labour and the cheap oil were the price paid to leapfrog from a 19th century economy to a 21st century economy. Now that that debt has been paid, citizens of developed nations are going to have to accept getting by with less.

    It will still be a heck of a lot more than anyone else on this planet, but the benefits of being the printer of the world’s reserve currency can only last for so long.

  23. williamwilliam says:

    Demographics plays a big role in the writer’s actions. Linked/Payscale report, on average, men’s income peaks in the 40’s (probably by choice for many) and women’s incomes peak in their 30’s (definitely happens by choice more than men).

    Economist Harvey Dent has observed for decades that spending peaks in the late 40’s for Americans.

  24. TedWa says:

    What I got from the article is that this is captured market is now affecting what I would consider the top 5%. That might be a good sign ! that when the power players are affected, government will have to act as they have the swag to change things even when the larger players (banksters) control the upper most levels of this global deceit.

  25. Sawgill says:

    First of all..congratulations to Wolf. New name is brilliant. Long time passive follower.

    I sympathize with the author. My wife and I worked hard, lived frugally, made smart/lucky investments, got an inheritance worth two years income. Retired w/ pensions+ SS+savings that approximates gross income at time of voluntarily retiring. I prefer to think myself smart rather than lucky, but who knows? Trying to relate here, not bragging.

    Two daughters now 28&32, and without a doubt they make their own decisions. Their generation is operating under a different set of rules. Seeing how the world works for them vis a vis how it worked for my generation is worth several long think pieces.

    I would like to point out to the above posters that under the current system one needs a credential for practically any endeavor. And a credential requires all manner of hurdles be it cosmetology, accounting, dental hygenist, surgery, you name it. And I do think this is valuable to society. So. Education is unavoidable if one is seeking a credential to enable them to join a ‘guild’.

    The confirmation bias comment about bearish sentiment while the bull market continues year after year… So true!!

  26. Anonymous says:

    Commenters who don’t understand your point about credentials have either (1) never been involved in the hiring process or (2) under the delusion that everybody – or at least most – can be simply be entrepreneurs if they just try hard enough.

    It reminds of the old chestnut about a town where everybody made a living taking in each other’s laundry…

  27. albizu says:

    It’s interesting how many people here have missed the main point, due to their transparent envy of the author’s economic status.

    The point being that she and her husband belong to an income bracket that would normally be spending without a care in the world, and expected to help drive a consumer recovery, above all as they see their income as still being what one used to regard as rock-solid.

    She is not pleading hardship, but pointing out that they are retrenching significantly as they can see that profound changes have taken place and can well imagine how they will have to help their children: hence cancelled spending. They know the recovery is a lie, and that expectations must change profoundly.

    This is being seen globally among those who still have anything, but are not in the oligarch class: I (in the UK) have lost many customers due to this, and do not see them coming back, ever. So have my family and friends in Europe: consumer retrenchment is the order of the future.

    • Desertmer says:

      Albizu: Thanks. I should have let you just make my point- you were much clearer!!

      • albizu says:


        My pleasure: I got you because I have seen this retrenchment among the prosperous happening here in the UK.

        May your orchard flourish: how extraordinary that people assumed you were rich, spoiled and IDLE!

        • HD says:

          Fair enough, Desertmer. You did good with sharing your story IMHO. Your world isn’t mine, but I get your point and it is an important one.

  28. i remillard says:

    Sorry; I have read all these comments and can’t figure out why people leave out two things. Firstly, cheap energy, what was oil priced at compared to gold, or other commodities during the last 50 years? Secondly labor is a commodity as viewed on a spreadsheet, looking at the cost of labor is sobering. When will people figure out that as energy prices rise so does the cost of each employee? I would bet that without federal subsidies the big oil companies could not function as going concerns. This author is right it is getting to be time to stare reality in the face our entire economy was and is based on energy consumption most of it wasteful.

  29. Sam Grant says:

    I cannot believe the disgusting, childish, jealous criticisms of Desertmer’s financial situation! The former opportunity-laden American economy of yore allowed her husband to achieve what he has and to provide the life he’s given his family. It doesn’t sound like a farthing was handed to him and I would bet he puts in long hours and has his own form of stress. How can you possibly criticize that? IT COULD HAVE BEEN ANY ONE OF YOU had you had the right smarts, drive, talent, education and decision-making abilities along with a dash of luck. The point is, we live in a country where people USED to be able to rise from nothing to something. Desertmer and her husband should be admired for what they’ve achieved with no apparent hand-outs and more importantly, their recognition that the once-healthy economy is o-v-e-r and they see they must adjust accordingly. Most Americans are totally asleep and are in for an awakening of volcanic proportions when the S finally HTF. Furthermore, she was NOT whining or bragging and was asking for no one’s pity! She was merely stating the activities they were going to cut in order to prepare for the possibility of having to help her children, which spending cuts affects the income of other people! She did not deserve to be attacked so viciously. No one, at ANY income level, likes to downgrade. Finally, an economy needs every income level to prosper, with the exception of those who prosper because of crony capitalism/insider trading as we see on Wall Street and D.C.

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