Join Early Retirement Today
Reply
 
Thread Tools Search this Thread Display Modes
Is America broke?
Old 12-25-2011, 05:46 PM   #1
Dryer sheet aficionado
 
Join Date: May 2011
Posts: 27
Is America broke?

Hello all,

Firstly, I ask this with the greatest respect as a guest in your country for the past 4 years. I'm lucky enough to have lived and worked in 3 continents so I guess I have some global perspective to compare and contrast...

Anyway: As I was growing up, my parents grilled me on the value of taking care of myself financially, never placing financial reliance on others. I read a stat the other day that claimed 56% of Americans age 65 have a NW of <$25k. What does the future hold for these people and those making their way through life not saving anything and living for the moment? As much as my financial discipline suggests that they should be abandoned to their fate and have to live with the consequences of whatever decisions they made along the way, isn't the reality going to be much different? Can any government just turn its back on its citizens (aka voters) without a care? But the US can't afford to do this (well, not unless it keeps printing money) and so therefore, isn't it accurate to claim that the country is technically broke because it relies on other nations continually buying its paper and increasing its debt? I mean, if I rely on my credit card company not only to forgive my debt every month, but to increase my limit so I can continue to live, I would consider myself technically broke. And at some future point, when those debtor nations say "enough", the whole house of cards comes crashing down because many American citizens haven't learned to live within their own means?

As I said, I ask this gently and with respect because there are many countries (my own in Europe included) with similar problems. But I guess I'm looking at this 800 pound gorilla right now...

Merry Christmas everyone!
__________________

__________________
Jamtin34 is offline   Reply With Quote
Join the #1 Early Retirement and Financial Independence Forum Today - It's Totally Free!

Are you planning to be financially independent as early as possible so you can live life on your own terms? Discuss successful investing strategies, asset allocation models, tax strategies and other related topics in our online forum community. Our members range from young folks just starting their journey to financial independence, military retirees and even multimillionaires. No matter where you fit in you'll find that Early-Retirement.org is a great community to join. Best of all it's totally FREE!

You are currently viewing our boards as a guest so you have limited access to our community. Please take the time to register and you will gain a lot of great new features including; the ability to participate in discussions, network with our members, see fewer ads, upload photographs, create a retirement blog, send private messages and so much, much more!

Old 12-25-2011, 05:53 PM   #2
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
REWahoo's Avatar
 
Join Date: Jun 2002
Location: Texas Hill Country
Posts: 42,107
You say you work on Wall Street. Don't you already know the answer to your question?
__________________

__________________
Numbers is hard

When I hit 70, it hit back

Retired in 2005 at age 58, no pension
REWahoo is offline   Reply With Quote
Old 12-25-2011, 06:12 PM   #3
Dryer sheet aficionado
 
Join Date: May 2011
Posts: 27
Quote:
Originally Posted by REWahoo View Post
You say you work on Wall Street. Don't you already know the answer to your question?
ReWahoo, I do work on Wall Street and if my view were the only one that mattered, I wouldn't be asking the question. There are many people that think that some countries are financially bullet-proof because they can print their way out of any money problem: I'm curious how many in this forum agree or disagree with that statement about the US.
__________________
Jamtin34 is offline   Reply With Quote
Old 12-25-2011, 06:19 PM   #4
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
REWahoo's Avatar
 
Join Date: Jun 2002
Location: Texas Hill Country
Posts: 42,107
Quote:
Originally Posted by Jamtin34 View Post
There are many people that think that some countries are financially bullet-proof because they can print their way out of any money problem: I'm curious how many in this forum agree or disagree with that statement about the US.
Maybe you should do a poll? I'd be surprised if you got more than 10-15% to respond that they agree.
__________________
Numbers is hard

When I hit 70, it hit back

Retired in 2005 at age 58, no pension
REWahoo is offline   Reply With Quote
Old 12-25-2011, 08:02 PM   #5
Recycles dryer sheets
ratto's Avatar
 
Join Date: Mar 2011
Posts: 225
Quote:
Originally Posted by REWahoo View Post
Maybe you should do a poll? I'd be surprised if you got more than 10-15% to respond that they agree.
Not sure what percentage this forum members represent in the general population of this great country. The dollar is currently regarded as "our currency, but your problem". When its reserve status is gone, we're going to taste the bitter medicine what Argentina had before.
__________________
ratto is offline   Reply With Quote
Old 12-25-2011, 09:01 PM   #6
Thinks s/he gets paid by the post
frayne's Avatar
 
Join Date: Oct 2002
Location: 19th Hole
Posts: 2,531
Not that I doubt it but where did you get your 56% stat ?
__________________
A totally unblemished life is only for saints.
frayne is online now   Reply With Quote
Old 12-25-2011, 09:34 PM   #7
Thinks s/he gets paid by the post
 
Join Date: Jul 2003
Location: Pasadena CA
Posts: 2,695
AFAIK the 56% did not include 1) (most importantly) the value of SS & pensions, 2) home value, 3) other defered income, it was just investable assets. So a bunch in that group are doing OK but still a significant group are in for difficult times. I suspect the US will have a powerful position for a long time due to the size of the economy, we have resources like food and energy, strong military (bad financial investment until you really need it), significant manufacturing capacity and fairly industrious people.
But there will be some adjustments and if/when we lose reserve currency status it will be panful. Still, relative to a lot of other countries we will be OK.
__________________
T.S. Eliot:
Old men ought to be explorers
yakers is offline   Reply With Quote
Old 12-25-2011, 09:35 PM   #8
Moderator Emeritus
Nords's Avatar
 
Join Date: Dec 2002
Location: Oahu
Posts: 26,617
You may think that your question is fiscal, but it'll end up in the political forum pretty soon.

I think if you work on Wall Street that it's good to study the economics of the Great Depression. One of the lessons of that era is that governments exist to deficit-spend their way out of recessions to keep the economy going. Having a bunch of Americans slam their wallets shut right now is probably not such a hot idea.

Comparisons of this economy to Europe, Japan, and Argentina are logically fundamentally flawed, although provocative discussion-starters.

As to your other questions: Otherwise people will work until they die, and politicians will only pay attention to their contributors voters constituents.

But you probably already know the answers to those questions, so I'm still not sure I understand why you're asking them in the first place.
__________________
*
*

The book written on E-R.org, "The Military Guide to Financial Independence and Retirement", on sale now! For more info see "About Me" in my profile.
I don't spend much time here anymore, so please send me a PM. Thanks.
Nords is offline   Reply With Quote
Old 12-25-2011, 10:24 PM   #9
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
brewer12345's Avatar
 
Join Date: Mar 2003
Posts: 16,391
How does the old timey song go?

"I ain't broke, but I'm badly bent."
__________________
"There are three kinds of men. The one that learns by reading. The few who learn by observation. The rest have to pee on the electric fence for themselves."



- Will Rogers
brewer12345 is offline   Reply With Quote
Old 12-25-2011, 10:31 PM   #10
Thinks s/he gets paid by the post
Brett_Cameron's Avatar
 
Join Date: May 2011
Location: South Eastern USA
Posts: 1,010
No, America isn't broken or broke.
__________________
Brett_Cameron is offline   Reply With Quote
Old 12-26-2011, 08:23 AM   #11
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
pb4uski's Avatar
 
Join Date: Nov 2010
Location: Vermont & Sarasota, FL
Posts: 16,428
Quote:
Originally Posted by gsparks2 View Post
No, America isn't broken or broke.
+1 on going broke. Broken is a bit of a question in my mind, but dysfunctional at the least. While there are many people with little savings, they also commonly have a very modest standard of living (particularly by Wall Street standards). By the time that they retire, which may be later than they think, pensions and SS will allow them to ride out their years without becoming a burden to society (assuming that SS gets fixed, which at this time would seem to be well within our grasp if our politicians have the courage to do so).
__________________
pb4uski is online now   Reply With Quote
Old 12-26-2011, 09:03 AM   #12
Thinks s/he gets paid by the post
 
Join Date: Oct 2006
Posts: 3,820
The OP didn't provide a source for the 56%. It's probably this: How Much Have Americans Saved for Retirement | Department of Numbers

Quote:
The Employee Benefit Research Institute released its annual Retirement Confidence Survey last week which, as the name suggests, measures Americans' confidence in their retirement prospects. It also provides the best annual look at how much American households have saved for retirement excluding the value of their homes and any defined benefit plans. In essence, the survey reflects what Americans have amassed in 401Ks, IRAs and savings accounts.
Which links to this: http://www.ebri.org/pdf/surveys/rcs/...Age_FINAL1.pdf

The 56% is an average for all age groups. As expected, it varies by age - 71% for the under-35 vs. 36% for the over-55. (see page 2)

I expect that in 2005 lots of young Americans felt that the foundation of their savings plan would be a house, so that's where they put their money.
Since then, the collapse of the housing market plus nearly 10% unemployment (which means that people spent down any liquid savings) have really hurt financial positions.

I think the 56% reflects four things: the number ignores the value of a house, average Americans don't save as much as average posters at the ER forum, we got caught by some forces beyond anyone's control, and we made a bunch of lousy political decisions.

If I wanted to expand on that, I'd have to move my response to a different forum.
__________________
Independent is offline   Reply With Quote
Old 12-26-2011, 10:56 AM   #13
Thinks s/he gets paid by the post
Spanky's Avatar
 
Join Date: Dec 2004
Location: Minneapolis
Posts: 4,046
America, by definition, is not broke since it has yet defaulted its financial obligations. If the trend of collecting revenue far less than spending continues, bankruptcy is a possible reality. There are no shortage of proposed solutions, namely increased generation of tax revenue and significant reductions in entitlement programs, such as Social Security, Medicare and public pension that will undoubtedly result in public outcry. Some examples are discontinuing tax cuts, eliminating tax breaks, raising taxes without impeding economic growth, instituting massive cutbacks in social programs (very unpopular idea asking the public to pay more in taxes for fewer services), raising interest rates gradually to ward off inflation and encourage consumers to save more of their earnings, boosting U.S. exports, but without triggering a sudden plunge in the greenback. It’s true that these are pie-in-the-sky ideas. The devil is in the details. Nevertheless, it will be painful and quality of life will suffer or change.
__________________
May we live in peace and harmony and be free from all human sufferings.
Spanky is offline   Reply With Quote
Old 12-26-2011, 11:19 AM   #14
Thinks s/he gets paid by the post
frayne's Avatar
 
Join Date: Oct 2002
Location: 19th Hole
Posts: 2,531
Nope, not broke, just in debt up to our eyeballs, that's the bad news. Good news is, we own the printing presses.
__________________
A totally unblemished life is only for saints.
frayne is online now   Reply With Quote
Broke, relative to what?
Old 12-26-2011, 11:23 AM   #15
Recycles dryer sheets
 
Join Date: Aug 2011
Location: aberdeen
Posts: 267
Broke, relative to what?

Although there are prophets of doom and gloom and America may not be doing too well, compared to other rising nations at the moment, I do not think America is going the way of the Holy Roman empire yet!
1. It is such a large country with vast agricultural and manufacturing sectors and vibrant research based industries. Other countries want to steal our secrets.
2. It is wrong to compare US with say, Sweden who always over blow their so called success. In reality these are just small countries with homogenous pop. but deep inside, they also have big problems. Their economy is I'll bet smaller than California.
3. Although we have terrible political gridlock, the American people are quite resilient and can adopt quickly, and downsize if they have too. We still have lots of food, and roof over our head & a flat S. TV, we can live with that.
4. America is still the biggest consumer(IMO), and Europeans should not be too snotty, since, if we decide to shut down and live a simple life and not buy your "stuff", we'll still be OK, but who is going to buy your "stuff"
Africa? Bangladesh? Vietnam? This I think will lead to a collapse of the European economy.
5. America has other options. It can trade with Latin America for cheaper durable goods, food, and other stuff. It can stretch it's buying needs.
6. People may decide to develop homegrown industries-like the Made in America crowd", develop small industries and things can turn around.
We still have enterpreneur spirit.
7. If nothing else fail, we still have lots of corn, wheat, chicken, beef,
soybeans, or eat more "ramen noodles" and live a simpler life.
__________________
Birchwood is offline   Reply With Quote
Old 12-26-2011, 12:50 PM   #16
Recycles dryer sheets
ratto's Avatar
 
Join Date: Mar 2011
Posts: 225
Quote:
Originally Posted by frayne View Post
Nope, not broke, just in debt up to our eyeballs, that's the bad news. Good news is, we own the printing presses.
Running printing presses is already too old fashioned. In now days, we just punch a couple of extra zeros in the feds computer, voila, we instantly have more money. Plus, we won't risk running out of paper for banknotes as Argentina did. There is a very good PBS documentary about this topic, The Ascent of Money | PBS.

Before we bring out the porky, to OP, I would say the answer is yes and no. Yes if you think so, and no if you don't. After all, we do not see things as they are, we see things as we are.
__________________
ratto is offline   Reply With Quote
Old 12-26-2011, 03:34 PM   #17
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
clifp's Avatar
 
Join Date: Oct 2006
Posts: 7,450
Quote:
Originally Posted by Birchwood View Post
Although there are prophets of doom and gloom and America may not be doing too well, compared to other rising nations at the moment, I do not think America is going the way of the Holy Roman empire yet!
1. It is such a large country with vast agricultural and manufacturing sectors and vibrant research based industries. Other countries want to steal our secrets.
.
+7
I agree with these and the other six reasons listed. I certainly don't like the direction the country is heading but we are a far from broke. Plus America is far greater than our silly government, even if the government goes broke the country is filled with world class business, farmers, and entrepreneurs.
__________________
clifp is offline   Reply With Quote
Old 12-26-2011, 03:49 PM   #18
Moderator
MichaelB's Avatar
 
Join Date: Jan 2008
Location: Rocky Inlets
Posts: 24,455
The issues we face are our own creation, not those of another, and simple to remedy, because they mostly need a change in behaviour. Compared with the challenges other generations have faced, we have it easy. Perhaps that is the real problem.
__________________
MichaelB is offline   Reply With Quote
Old 12-26-2011, 03:52 PM   #19
Full time employment: Posting here.
 
Join Date: Mar 2010
Location: Chicago
Posts: 867
First of all we have to vote out this disfunctional group we have in Washington. They are only concerned about getting re-elected and don't have the will or courage to lead. It is going to take a lot of sacrifice on the part of all Americans rich and poor to get out of this mess. I know one thing I would not bet against America.
__________________
ripper1 is offline   Reply With Quote
Old 12-26-2011, 04:10 PM   #20
Moderator Emeritus
 
Join Date: Oct 2007
Posts: 4,929
Quote:
Originally Posted by ripper1
First of all we have to vote out this disfunctional group we have in Washington. They are only concerned about getting re-elected and don't have the will or courage to lead. It is going to take a lot of sacrifice on the part of all Americans rich and poor to get out of this mess. I know one thing I would not bet against America.
Yeah! Throw the bums out, and get a fresh batch of dysfunctional party apparatchiks in office. (Out here we set up term limits to make sure the bums would be periodically replaced. The real campaigning happens behind closed doors in each party, as folks about to be termed out swap favors for their next position, and help choose their replacements among the next batch of sock puppets that the parties will run.)

It's a tough job, but somebody has to help keep things properly aligned for the plutonomy.

https://docs.google.com/viewer?a=v&p...1ZTNm&hl=en_US
__________________

__________________
M Paquette is offline   Reply With Quote
Reply


Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
 
Thread Tools Search this Thread
Search this Thread:

Advanced Search
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


Similar Threads
Thread Thread Starter Forum Replies Last Post
Die Broke Golden Mean FIRE and Money 54 12-24-2011 03:50 PM
Will I be Charged a Bank of America Debit Card Fee? nico08 FIRE and Money 12 10-12-2011 09:28 AM
What happens if Bank Of America goes under? Karloff Other topics 39 10-11-2011 11:11 AM
Bank of America to charge $5 debit card fee MasterBlaster FIRE and Money 92 10-01-2011 02:19 PM

 

 
All times are GMT -6. The time now is 07:10 PM.
 
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2017, vBulletin Solutions, Inc.