We haven’t looked at the geopolitical situation closely since the elections.
The latest coms to us via Harris Polling :
click for larger graphic
The Journal observes:
"AMERICANS’ SUPPORT of President Bush’s handling of the Iraq war has declined to its lowest level since March 2003, when Harris Interactive began measuring U.S. attitudes on the issue. The latest poll of 2,322 Americans shows only 37% approve of the job Bush is doing. Ahead of the Iraq war, a series of Harris surveys asked if people were "confident Bush would make the right decision regarding an attack on Iraq." Since March 2003, Harris has asked, "Overall, how would you rate the job Bush has done in handling the issue of Iraq?" This chart tracks positive and negative responses to the questions since September 2002."
The complete results of the poll can be found here.
Support for Bush’s Iraq Policies Falls to Lowest Level, Poll Shows
THE WALL STREET JOURNAL ONLINE
May 18, 2005
Are we spenders or savers?
Gross references Bear Stearns Economist David Malpass:
"Some say that a flaw may exist not in our national character but in the way the government calculates savings: because the bureau’s method of tallying income and consumption doesn’t take into account structural changes in the finances of Americans, it may systematically understate income and overstate consumption.
For example, income includes wages and salaries, interest on bonds, and stock dividends. But it doesn’t include capital gains on stocks, profits from selling a house, or withdrawals from 401(k) plans. Nearly 70 percent of families own homes, nearly half of all households own stocks and mutual funds, and an increasing number of baby boomers are turning to 401(k)’s for income. Those trends, some say, can make a big difference. "The structure of the household portfolio has changed over time," said David Malpass, chief economist at Bear Stearns.
Convinced that Americans aren’t frittering away all their income, Mr. Malpass plumbed the Federal Reserve’s Flow of Funds data, a trove of information on Americans’ spending and saving habits. In 2004, he found that the net worth of all households – their assets minus their liabilities – stood at $48.525 trillion, up 9.6 percent from 2003. Sure, rising home prices helped. "But even if you take out houses completely, it still shows huge savings," he said.
The problem with Malpass’ analysis is that he is taking a mathematical approach to what is essentially a behavioral issue. (Hey, it happens) Call it a rationalization. We tend to see those from both the Bullish and Bullish contingencies, as way to feel comfortable with those ideologies.
Let’s state this another way: As a nation, are we spenders or savers?
It raises a host of issues, some net positive, others more troubling. How does our behavior as consumer impact economic downturns? (It seems to smooth them out, at least recently). Why haven’t Businesses been as spendthrift as Consumers this recovery? (My theory is execs are afraid to see their options go underwater again). And the $64,000 question, how might this low savings rate impact retirees when the Baby Boom generation starts playing shuffleboard?
I believe we are not savers. The fact that so many pension plans, 401ks and IRAs go unfunded is a big clue as to that. (It also reveals how Tax ignorant all too many people are).
But stop for a moment to contemplate this: That people would rather spend their money consuming, rather than put it into a 401K where their employer does dollar-for-dollar matching is proof positive of our savings mindset.
That’s right, as opposed to GETTING FREE MONEY, many Americans still prefer to shop — rather than save.
I’m curious today iof Malpass is correct. So here’s a suggestion for what would be a signifcant and useful analysis: Use Malpass’ methodology for calculating the national savings rate — and then apply it to as many countries we can get data for. I’d like to see a list that includes at least: the U.S., Japan, Great Britain, Norway, Sweden, France, South Korea, Italy, Germany, Australia, Canada, Spain, Israel and South Africa. That’s a short list, but we want it as extensive and complete as possible.
The goal is to determine whether or not, as judged against a planet of our peers, we Americans are — relatively speaking — savers or spenders.
Should be a rather interesting discussion . . .
Is It a Savings Crisis or a Math Error?
By Daniel Gross
NYT, May 22, 2005
Tony Crescenzi had an interesting article on RealMoney this week. In it, he notes that as the housing market soars, it ends up knocking rents lower. After all, why rent if ultra low real interest rates allow you to buy for the same price, and with nearly no money down? So what’s the problem with…Read More