{"id":13189,"date":"2011-11-19T08:52:39","date_gmt":"2011-11-19T15:52:39","guid":{"rendered":"http:\/\/www.survival-spot.com\/survival-blog\/?p=13189"},"modified":"2013-02-04T21:17:00","modified_gmt":"2013-02-05T04:17:00","slug":"37-percent-of-young-households-held-zero-or-a-negative-net-worth-in-2009","status":"publish","type":"post","link":"https:\/\/www.survival-spot.com\/survival-blog\/37-percent-of-young-households-held-zero-or-a-negative-net-worth-in-2009\/","title":{"rendered":"The young and the broke \u2013 37 percent of young households held zero or a negative net worth in 2009"},"content":{"rendered":"

It is hard to imagine a future\u00a0generation of Americans<\/a>\u00a0where those moving forward are actually poorer than the current generation.\u00a0 Yet that is precisely the world we are diving into.\u00a0 Those that purchased homes in the pre-bubble days and also\u00a0attended college<\/a>\u00a0in less inflated times have a massive head start on the current younger generation that is contending with a bursting housing bubble and a\u00a0financial system that might as well be a roulette wheel<\/a>.\u00a0 One startling figure from a recent Pew Research report shows that 37 percent of young households hold zero or a negative net worth.\u00a0 This is not a good way to build a healthy financial future.\u00a0 The wealth gap between previous generations is also becoming increasingly large.\u00a0 This narrative ties into the overall systemic pilfering of the\u00a0middle class<\/a>.<\/p>\n

 <\/p>\n

How large is the net worth gap?<\/strong><\/p>\n

The gap between younger and older Americans has never been so large:<\/p>\n

\"chart-young-old-wealth-gap3.top\"<\/a><\/strong><\/p>\n

Source:\u00a0 CNN, Pew Research<\/p>\n

\u201c(CNN Money<\/a>) In 1984, households headed by people age 65 and older were worth just 10 times the median net worth of households headed by\u00a0<\/strong>people 35 and younger.<\/p>\n

But now that gap has widened to 47-to-one, marking the largest wealth gap ever recorded between the two age groups.\u201d<\/p><\/blockquote>\n

A large part of this gap has to do with the timing of the housing bubble.\u00a0 Many younger Americans bought during inflated times while\u00a0Wall Street banks were pillaging the entire system<\/a>.\u00a0 Older Americans purchased homes during a time when Glass-Steagall was still in place and the bulk of loans made in the housing market came from stale fixed rate mortgages.\u00a0 Yet I would also argue that the cost of college today is sapping out a large portion of future earnings.\u00a0 We have seen a diminishing return on investment for college graduates:<\/p>\n

\"earnings-of-college-grads-and-cost-of-college1\"<\/a><\/strong><\/p>\n

Source:\u00a0 BusinessWeek<\/p>\n

A college education is becoming more expensive while the return on investment is falling.\u00a0 A similar trend hit in the housing market.\u00a0 Yet the gap in just one generation has catapulted into a tragic scenario.\u00a0 In 1984 households headed by those 65 and older held a 10 time median net worth advantage on households headed by those 35 and younger.\u00a0 That figure is now up to a stunning 47 today.\u00a0 A gap is always expected as those who are older have time to save and accumulate but the size of the gap is troubling.<\/p>\n

You also have to factor in the casino that is now our stock market.\u00a0 Take a look at the S&P 500 performance from 1990 to 2000 and then from 2000 to 2010:<\/p>\n

\"snp<\/a><\/strong><\/p>\n

And then the last decade:<\/p>\n

\"snp<\/a><\/strong><\/p>\n

This was a tough decade in regards to wealth building for younger Americans.\u00a0 The traditional means of building wealth through home equity and the stock market have largely been co-opted by hedge funds and\u00a0investment bankers for short-term profits and graft<\/a>.<\/p>\n

The trouble of course is the social friction that occurs when massive wealth inequality occurs especially when it occurs through social welfare for the rich and protecting failed businesses like our too big to fail banks.\u00a0 The last time we had anything like this was the years before the Great Depression.\u00a0 You have places like Spain where younger workers have unemployment rates over 40 percent and a headline rate over 20 percent:<\/p>\n

\"unemployment<\/a><\/strong><\/p>\n

People are waking up and asking for tangible solutions.\u00a0 Here are a few solutions that we need to start with:<\/p>\n

-1.\u00a0 Take systematic lobbying out of politics<\/strong><\/p>\n

-2.\u00a0 Break up the banks.\u00a0 Bring back Glass-Steagall<\/strong><\/p>\n

-3.\u00a0 Large surcharges on short-term trading to curb high frequency gambling<\/strong><\/p>\n

-4.\u00a0 Tax hedge funds and investment banks with regular income tax rates just like most Americans pay<\/strong><\/p><\/blockquote>\n

 <\/p>\n

These would help in getting a financial system designed to help the economy instead of an economy built to bailout the\u00a0financial system<\/a>\u00a0like we currently have.\u00a0 Expect the gaps to grow larger and the middle class to dwindle further if nothing is changed.<\/p>\n

SOURCE<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

It is hard to imagine a future\u00a0generation of Americans\u00a0where those moving forward are actually poorer than the current generation.<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[391,195],"tags":[],"class_list":["post-13189","post","type-post","status-publish","format-standard","hentry","category-economy","category-news"],"amp_enabled":true,"_links":{"self":[{"href":"https:\/\/www.survival-spot.com\/survival-blog\/wp-json\/wp\/v2\/posts\/13189","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.survival-spot.com\/survival-blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.survival-spot.com\/survival-blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.survival-spot.com\/survival-blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.survival-spot.com\/survival-blog\/wp-json\/wp\/v2\/comments?post=13189"}],"version-history":[{"count":0,"href":"https:\/\/www.survival-spot.com\/survival-blog\/wp-json\/wp\/v2\/posts\/13189\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.survival-spot.com\/survival-blog\/wp-json\/wp\/v2\/media?parent=13189"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.survival-spot.com\/survival-blog\/wp-json\/wp\/v2\/categories?post=13189"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.survival-spot.com\/survival-blog\/wp-json\/wp\/v2\/tags?post=13189"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}