Monday, August 18, 2008

Roubini: The Decline of the American Empire

I could not agree more.

1) Military overstretch
2) Rise of other powers (see above)
3) "Third, and more important, the US squandered its economic and financial power by running reckless economic policies, especially its twin fiscal and current account deficits."
"By now the US is the biggest net borrower in the world – running current account deficits still in the 700 billion dollars range – and the biggest net debtor in the world with its foreign liabilities now over 2.5 trillion dollars."
"the last time the US was running large twin deficits in the 1980s the main financers of these deficits were the friends and allies of the US, i.e Japan, Germany and Europe as the US external deficit was against these economies. Today instead the economic powers financing the US twin deficits are the strategic rivals of the US – China and Russia – and unstable petro-states, i.e Saudi Arabia, the Gulf States and other shaky petro-states."

The Winter of the Perma-bear

Excellent profile in the NYT mag of the one guy who predicted how bad this recession would be.

“Reckless people have deluded themselves that this was a subprime crisis,” he told me. “But we have problems with credit-card debt, student-loan debt, auto loans, commercial real estate loans, home-equity loans, corporate debt and loans that financed leveraged buyouts.” All of these forms of debt, he argues, suffer from some or all of the same traits that first surfaced in the housing market: shoddy underwriting, securitization, negligence on the part of the credit-rating agencies and lax government oversight. “We have a subprime financial system,” he said, “not a subprime mortgage market.”

(Nouriel Roubini. Here's his blog, I have to start reading it.)

Wednesday, August 13, 2008

Carmen Wong Ulrich Isn't Me...

And she didn't steal my book title. Well, she did, kind of. But no hard feelings.
People often ask me what's the deal--why are there 2 books that came out around the same time, with the same title?? Basically what happened was this. Back in spring 2004 I was contributing to a yearlong feature series in the Village Voice called "Generation Debt: The New Economics of Being Young." My editor was one of the first who came up with the phrase, as far as I can tell.

A few months into the series, my editor and I were taken out to lunch by an editor at Warner Business Books. He informed us that he was working on a personal finance book by a young writer from Money magazine aimed at young people, and did we want to contribute forewords, sidebars, etc. to the book?
My editor and I both said no. We were more interested in the political, economic, and cultural implications of the Generation Debt idea, than in personal finance (aka service journalism).
Well, the Warner Business guy came back and said, that's fine. But we're using your title anyway. And no, they didn't have to pay the editor, the Voice, or me for the use of the phrase "Generation Debt."

Just a few months later, I got approached by an editor who was interested in having me write the book that I wanted to write, about the political, economic, and cultural aspects of Generation Debt. I sold the book under the title "Class Dismissed," but despite the fact that there was another "Generation Debt" book coming out, Riverhead decided that the books were dissimilar enough, and that the title was the best possible title for my book.

So what happened? Well, both books sold ok. They were often reviewed together. Now Carmen has a personal finance TV show on CNBC. I have dabbled in personal finance, and in TV, but I have found I am ultimately much happier as a straight up journalist and an occasional political and social commentator, especially on youth issues and on economic issues as they affect people like you and me.

Tuesday, August 12, 2008

New Yahoo Column: Last Minute Student Loan

Can you still get a student loan for the fall semester? The answer is yes, but it's going to take some work.

Friday, August 08, 2008

The Democrats...

"the Democrats, as Representative Michele Bachmann assures us, “want Americans to move to the urban core, live in tenements, take light rail to their government jobs.”" don't have to work for the government. But otherwise, she's got me! I lived in an actual, 1903 tenement on the Lower East Side for two years.

Way 2 Save, America!

According to the president of the National Bureau of Economic Research, (on whose site I've been spending a lot of time lately researching various things) Americans didn't spend their stimulus checks. We saved 'em.

"Recent government statistics show that only between 10% and 20% of the rebate dollars were spent. ..Tax rebates of $78 billion arrived in the second quarter of the year. The government's recent GDP figures show that the level of consumer outlays only rose by an extra $12 billion, or 15% of the lost revenue. The rest went into savings, including the paydown of debt."

(Got that? Paying down debt is the same as saving. Better, even, if you pay down debt at 18% vs. saving at 4%)

Now, this is bad news for people that hoped the economic stimulus would help head off a recession. Yet it's good news for every individual who made a decision to put something away for a rainy day.

Monday, August 04, 2008

Retirement Nightmare

Heather Havrilevsky is 38 and she is NOT saving enough. Basically, no one is, if you believe the numerous online calculators she consulted. Her family should be putting away $100K a year!

(Some folks, like economist Lawrence Kotlikoff, think those retirement calculators tend to exaggerate, because they are sponsored by banks and brokerages that want more of your savings and investment fees. He believes you can do something called consumption smoothing, which essentially means: save less now, spend less, and steadily, all through retirement, die broke.)

However, this essay in Salon is a great read and speaks to many, many people's anxieties.
I was especially interested when she talks about how debt gets gifted from generation to generation, and the diminished value of hard work when debt takes up your earnings.

"And of course I agree that kids should learn the value of hard work. But should they do it while they're in college and ostensibly working hard already to get a good education? And after they graduate, when they're saddled with huge debts and have to spend most of their income just to pay them down, how will they feel about work then? Won't it seem sort of pointless to work so hard when they're still in debt, year after year, despite their best efforts to get rid of it? And how will they afford anything, when they're in enormous debt? By making their debts even bigger with credit cards, that's how. It's true that hard work can be very satisfying. But let's face it, if there were a "hard work calculator" out there somewhere, replete with supporting charts and graphs, it would demonstrate that the value of hard work is diminishing as the costs of food and insurance and college and retirement rise exponentially. "