personal savings rate more negative for US consumer since 1933 ?

S

SethArb

can anyone confirm this ?

I read on the net that Stephen Roach, wrote this
a week or so ago.

-According to Federal Reserve estimates, equity extraction by U.S. households topped $600 billion in 2005 -- more than enough to compensate for the shortfall of earned labor income. Comforted by this asset-based injection of purchasing power, consumers had little compunction in stretching traditional income-based constraints to the max. The personal saving rate fell deeper into negative territory than at any point since 1933, and outstanding household sector indebtedness -- as well as debt service burdens -- hit new record highs.-
 
Most of the ~$600-billion was spent on consumption items, not productive capacity. What will happen when people can't refinance their homes anymore? We'll see. I don't think it'll be good.
 
I think the mother of all crashes will happen within the next 5 years. It's a scary though.. I think I'm gonna migrate to China. lol.
 
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