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Monday, December 27, 2010

"Things to make you go, Hmm..."

For the past 5-6 weeks, the news media has talked about nothing but economic recovery- shoppers shopping, markets climbing, tax cuts for everyone, economists suddenly optimistic and jubilant about 2011...

This was not accidental.. it was a propagandistic blitzkrieg to make you and yours feel more confident to spend the little money you have left on presents, or to extend your credit cards either further.

Now that Christmas is over, its interesting the news items appearing today, Monday December 27th...

Bailed-Out Banks Slip Towards Failure  (Wall St. Journal) -- "Nearly 100 U.S. banks that got bailout funds from the federal government show signs they are in jeopardy of failing. The total, based on an analysis of third-quarter financial results by The Wall Street Journal, is up from 86 in the second quarter, reflecting eroding capital levels, a pileup of bad loans and warnings from regulators. The 98 banks in shaky condition got more than $4.2 billion in infusions from the Treasury Department under the Troubled Asset Relief Program."

Housing Double-Dip Ahead (CNBC) -- " 'The potential for a significant down-leg in home prices is being underestimated. The unsold existing inventory is still 80% above the historic norm at 3.7 million (unsold homes),' said David Rosenberg, chief economist at Gluskin Sheff"

$5 for a Gallon of Gas in 2012 (CNN Money) -- "The former president of Shell Oil, John Hofmeister, says Americans could be paying $5 for a gallon of gasoline by 2012.  In an interview with Platt's Energy Week television, Hofmeister predicted gasoline prices will spike as the global demand for oil increases.  "I'm predicting actually the worst outcome over the next two years which takes us to 2012 with higher gasoline prices," he said.  Tom Kloza, chief oil analyst with Oil Price Information Service says Americans will see gasoline prices hit the $5 a gallon mark in the next decade... "

Baby Boomers near 65 with Retirements in Jeopardy (AP) -- ""The situation is extremely serious because baby boomers have not saved very effectively for retirement and are still retiring too early," says Olivia Mitchell, director of the Boettner Center for Pensions and Retirement Research at the University of Pennsylvania.  There are several reasons to be concerned:

-- The traditional pension plan is disappearing. In 1980, some 39 percent of private-sector workers had a pension that guaranteed a steady payout during retirement. Today that number stands closer to 15 percent, according to the Employee Benefit Research Institute in Washington, D.C.

-- Reliance on stocks in retirement plans is greater than ever; 42 percent of those workers now have 401(k)s. But the past decade has been a lost one for stocks, with the Standard & Poor's 500 index posting total returns of just 4 percent since the beginning of 2000.

-- Many retirees banked on their homes as their retirement fund. But the crash in housing prices has slashed almost a third of a typical home's value. Now 22 percent of homeowners, or nearly 11 million people, owe more on their mortgage than their home is worth. Many are boomers.

-- Mortgage Debt. Nearly two in three people age 55 to 64 had a mortgage in 2007, with a median debt of $85,000.

-- Social Security. Nearly 3 out of 4 people file to claim Social Security benefits as soon as they're eligible at age 62. That locks them in at a much lower amount than they would get if they waited.

The monthly checks are about 25 percent less if you retire at 62 instead of full retirement age, which is 66 for those born from 1943 to 1954. If you wait until 70, your check can be 75 to 80 percent more than at 62. So, a boomer who claimed a $1,200 monthly benefit in 2008 at age 62 could have received about $2,000 by holding off until 70.

-- Medical Costs. Health care expenses are soaring, and the availability of retiree benefits is declining. "People cannot fathom how much money will be needed to simply cover out-of-pocket medical care costs," says Mitchell of the University of Pennsylvania.

-- Employment. Boomers both need and want to work longer than previous generations. But unemployment is near 10 percent, and many have lost their jobs. The average unemployment period for those 55 and older was 45 weeks in November. That's 12 weeks longer than for younger job-seekers. It's also more than double the 20-week period this group faced at the beginning of the recession in December 2007."'

~ * ~ You know its funny...  between all the 'Black Friday' mayhem and the "Holiday Shoppers are Back!!" declaration by AP just 2 days ago, I didn't see these types of news articles for over a month.  It's almost like, I don't know.. the news media sat on these stories during the holidays so not to upset the retailers paying to advertise their Christmas sales.  Like the 90s song from C&C Music Factory went.. "Things to make you go Hmm..."

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