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Thursday, March 7, 2013

Nothing Has Changed! Stock Market As Well As Irresponsibility at All-Time Highs

The financial panic of 2008 was merely a dress rehearsal for a greater, more painful transition (panic) in 2016.  Why?  Nothing has changed!  Consumption and savings as a percentage of income are near all-time highs and lows, respectively (chart 1 and 2).  This means millions of Americans, even more than the previous cycle of 2007-2009, will be 'dangerously unprepared' when the cyclical downturns strikes with little advanced warning.

A society driven by moral hazard (perpetual bailouts) and educated by lesson from pop culture rather than history is unlikely to anticipate the financial, economic, and political changes coming.  This lack of understanding likely means an abrupt end to many of the social safety nets that generations of Americans have come to view as indestructible.

Chart 1:  Personal Consumption As A % of Personal Income

Chart 2:  Personal Savings As A $ of Personal Income


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