1 in 3 Americans poor or near poor

[Carinthium]

I do not THINK this is the case- I am PROPOSING a theory, despite not being sure if it is true or not, because I wanted to see if you people had enough evidence to knock it down.

I wasn't claiming it was the only factor- just wondering if it might be a strong one based on what I read in Freakanomics (I've been studying for my exams lately, so my economics knowledge has atrophied for the time being). Perhaps (the reason I'm not doing it myself is because I'm inept at it) somebody should look up some reliable statistics on this- or perhaps refute the arguments there? I've seen references to it before- I'm assuming at least some of the people here have read it.

[PeZook]

I do not THINK this is the case- I am PROPOSING a theory, despite not being sure if it is true or not, because I wanted to see if you people had enough evidence to knock it down.

And where's the evidence pointing to that "theory" of yours? You expect people to knock it down without actually presenting anything of substance to back this up: people are well justified in just dimissing it out of hand.

I wasn't claiming it was the only factor- just wondering if it might be a strong one based on what I read in Freakanomics (I've been studying for my exams lately, so my economics knowledge has atrophied for the time being). Perhaps (the reason I'm not doing it myself is because I'm inept at it) somebody should look up some reliable statistics on this- or perhaps refute the arguments there? I've seen references to it before- I'm assuming at least some of the people here have read it.

If you want to use Freakonomics as evidence, the least you could do is provide a proper citation,since that site is incredibly huge.

[Starglider]

The most important intrinsic factors for economic outcomes are foresight and focus on material gain. Willingness to defer satisfaction is essential to making educational and financial choices that create a high probability of earning later, e.g. going into careers with good future prospects. Focus on material gain rules out unproductive choices such as staying in academia, travelling the world, having children young etc and pushes people to fight for promotions, change jobs more often, get boring certifications etc. Better than average intelligence certainly helps but frankly pragmatism (greed, if you like) is more relevant than genius. Phil Greenspun's classic essay on women in science is a nice exploration of this point.

[Stark]

That sure is an interesting essay, but maybe not for the reasons you think.

I'm not sure (beyond absurd tuition debt in America) that 'choice of major' is a serious contributor to growing poverty (or the concentration of capital or any related issue).

[Plushie]

A note about "Near Poor" which is a great term by the way.... Not to distract from the main point illustrating the clear economic hardship of so many people, but a lack of financial literacy is a clear and contributing factor to so many being considered 'near poor'. I council at least dozen people a day on making sound financial decisions, prioritizing purchases based on importance, saving every week... even if it's five dollars. Teaching people how to spend and save with responsibility in a world where being a spendthrifts is seen as patriotic duty is damn near impossible. They just don't teach financial literacy in school and the fucking need to. More than anything else it needs to be done. No it is not a cure for poverty but people need to hear a clearly articulated counter point to the message of CONSUME! that is shoved down their throats every waking moment. They need to hear it loud clear and often and from a young age. Because as long as people continue to insist on plunking down their retirement savings and emergency money on iPads, Calvin Klein, and Burger King the near poor will stay near poor. But you cant really drive corporate profits when people act responsibly so I'll go yell in the corner until I'm blue in the face now.

I think the point needs to be made that this sort of thing is an acquired skill. People who consume and consume and never save and then find themselves in the situation described in the OP aren't really being irresponsible in some morally depraved way, only because such responsibility and financial literacy is actually a learned, acquired skill. It takes time and effort to learn those things and it's time and effort that people increasingly don't have. Especially in inner-cities, too, it takes an opportunity that fewer and fewer people are offered. When your best role models are gang members you're obviously not going to learn all the little skills and mores that make for a successful life.

I HATE HATE HATE the way judgmental down-nosing has turned prudence, thrift, and hard-work into curse words. Because some people are so insecure about themselves that they have to constantly judge others, looking down on them for their lack of these skills, people have become convinced that they don't need them or they already have them when they really don't.

Our ancestors survived on much less with much less. People running into illiquidity problems, often through no fault of their own (the whole point is that you can't hold somebody at fault for being 'irresponsible' if nobody ever took the time to teach them responsibility in a compassionate, effective way!), are capable of it, they just need the tools.

It used to be churches that provided that kind of human capital. In today's post-religious environment, I wonder who can step up.

[Broomstick]

No, hon, being in the ER in the US can cost your over a thousand dollars in the first two hours (I speak from experience)

My dear, I'm quoting from a study that was done in the States, regarding hospital expense from visiting an ER http://www.consumerhealthratings.com/in ... cat_id=274

Is that an average? Because I know from experience one can easily run up a $1,000 bill in the ER in a mere 2 hours. I've seen it more than once.

[Broomstick]

Didn't the statistics in Freakanomics demonstrate that poverty tends to be correlated to low intelligence? That does seem to validate the general line of inferior human beings ending up in poverty.

So... you're saying 1/3 of the US is of low intelligence? Holy fuck, don't you think we should find out WHY 1/3 of the population of a first world nation is retarded? 100 million idiots, how the hell did that happen?

Or maybe poverty isn't JUST a matter of a stupidity....?

The possible state of affairs I am suggesting is something along the lines of:
-Relative wealth is caused to a large degree by differences in intelligence
-In times of recession or economic hardship, the amount of intellect needed to avoid poverty goes up

I'm not disputing the actual statistics about poor and near-poor. I'm pointing out that there may be a degree of merit to who ends up poor and who doesn't.

Leaving aside the implication that you think I'm mentally retarded and that's why I'm poor.... How can you possibly said there is "merit" in who ends up poor? Do you approve of poverty? Do you somehow, implied by the word "merit", think there is a postive good of some sort served by people being in a situation where they can't get ahead, can't save for retirement, lack adequate (or sometimes any) healthcare, and one bad stroke of luck can leave them literally homeless?

Nor do you seem to distinguish between those who are born poor, those who become poor and stay that way, and those who are temporarily poor. Those are three distinct groups.

But let's look at the last group for a moment - several years ago, a tornado plowed through the town I live in. About a dozen homes were completely destroyed, bits and pieces spread over several kilometers of wreckage. The residents of those homes lost everything they owned, aside from a few scraps recovered over the next week. A few of them lost their jobs as well, due to local businesses being destroyed. They lived in homeless shelters for several months, relied on donated clothing, donated food, etc. In a word, they went from middle-class to poor overnight. Are you going to argue this occurred because they were stupid?... or because they got hit by a tornado? Well, maybe you'll say they're stupid for living in tornado country... but that's the entire continental US, which gets more tornadoes than anywhere else in the world. Are you saying a nation of 300 million is composed entirely of morons? They why aren't they all poor?

That's just one easy ass-pull of an example of how fucking stupid your theory is. Yes, the mentally deficient are frequently poor. So are the disabled. So are the young. So are the old. Being a child entails a risk for poverty in the US, as does being elderly. So does being disabled. Being a military veteran puts you at higher risk of unemployment, and therefore poverty, but does that somehow prove all soldiers are stupid? Or could there possibly be something else at work here, like prejudice? Or perhaps military experience isn't that useful in the civilian world?

Do you know what the young, the elderly, the disabled, the stupid, and the ex-military all have in common? It's not a level of intelligence - it's that either they are less likely to have a job, or unable to have a job.

Lack of employment correlates VERY strongly with poverty. Employment at a low-paying job correlates very strongly with being near poor. Intelligent people who are laid off for extended periods can wind up extremely poor despite their intelligence. Stupid people who manage to land jobs (perhaps they are the offspring of a company owner, or the son of a former president) can be very wealthy. An intelligent person who lacks education and training (perhaps due to being poor into poverty, in an area with shit public schools and poor parents unable to save for more education) is not going to be able to land a high-paying job, however much the US worships the meme of Horatio Alger.

So... YOU proposed a direct correlation between intelligence (or lack of it) and poverty. Provide some proof, other than "Oh, I vaguely recall reading something over here about it." DETAILS. Graphs and charts. C'mon, back up your claim.

[Akhlut]

1- How can you demonstrate that it's socio-economic status which comes first, not intelligence?

Because malnourished children tend to develop less well then well-nourished children. Additionally, prenatal care can go a long way to assuring good health, both mentally and physically.

Also: http://books.google.com/books?hl=en&lr= ... ce&f=false

The early intervention significantly enhanced IQ performance. Multivariate analysis of variance for repeated measures showed that the scores of the preschool intervention group were consistently higher than those of the control group, particularly after the first years of life.

There's also the matter that when one has some wealth, it is a lot easier to focus excess resources on education, whereas when one is poor or near-poor, those resources must be focused on survival, such as food, rent, utilities, gas, bus fare, and other basic necessities. Cuts have to come from somewhere, and a child's education is often one of those things cut. There's also the matter that in the US, school funding comes in a large part from property taxes, and school districts in poor areas are also poor (shockingly enough), meaning children there usually receive a worse-quality education then children in higher-income areas.

2- I'm suggesting the idea that they're poor because THEY are dumb. I'm not arguing too strongly for it because I'm not certain, but you haven't refuted the idea.

Compare: Paris Hilton versus all the MDs suffering for years or decades under heinous student debt.

[Rahvin]

No, hon, being in the ER in the US can cost your over a thousand dollars in the first two hours (I speak from experience)

My dear, I'm quoting from a study that was done in the States, regarding hospital expense from visiting an ER http://www.consumerhealthratings.com/in ... cat_id=274

Is that an average? Because I know from experience one can easily run up a $1,000 bill in the ER in a mere 2 hours. I've seen it more than once.

A quick look at the data in that report shows that it's based on numbers from 2008, and costs have been rising, so perhaps the data is outdated...but that looks like a pretty low average to me, too.

I had to take the fiance to the ER just last month. They didn't do anything other than a standard set of blood tests and an injection of an anti-nausea medication. The bill was over $5000. I have "good" insurance (or at least the most expensive premiums my employer offers...), and our copay was $500.

I love the disincentive to seek medical assistance in potential emergencies, don't you?

[Starglider]

That sure is an interesting essay, but maybe not for the reasons you think.

Poverty isn't the subject of the essay of course. I linked it simply because it was a better written example than I could give of how a group of people with demonstrably very high intelligence (PhD holders aiming for tenure) end up with very poor incomes or even long-term unemployed.

I'm not sure (beyond absurd tuition debt in America) that 'choice of major' is a serious contributor to growing poverty (or the concentration of capital or any related issue).

I agree and that wasn't the point I intended to make, although now that you mention it is probably a minor contributing factor. The surplus of people training for and valuing financial, legal and management roles, vs engineering and science roles, helped grease the wheels of finacialisation, globalisation and deindustrialisation.

[Carinthium]

And where's the evidence pointing to that "theory" of yours? You expect people to knock it down without actually presenting anything of substance to back this up: people are well justified in just dimissing it out of hand.

The original book's statistics showing that a person's genetic parents have far more impact on their ultimate wealth than their adopted parents- up until university age, their academic sucess is as their genetic parents would predict. (Chapter 5)

Leaving aside the implication that you think I'm mentally retarded and that's why I'm poor.... How can you possibly said there is "merit" in who ends up poor? Do you approve of poverty? Do you somehow, implied by the word "merit", think there is a postive good of some sort served by people being in a situation where they can't get ahead, can't save for retirement, lack adequate (or sometimes any) healthcare, and one bad stroke of luck can leave them literally homeless?

Nor do you seem to distinguish between those who are born poor, those who become poor and stay that way, and those who are temporarily poor. Those are three distinct groups.

But let's look at the last group for a moment - several years ago, a tornado plowed through the town I live in. About a dozen homes were completely destroyed, bits and pieces spread over several kilometers of wreckage. The residents of those homes lost everything they owned, aside from a few scraps recovered over the next week. A few of them lost their jobs as well, due to local businesses being destroyed. They lived in homeless shelters for several months, relied on donated clothing, donated food, etc. In a word, they went from middle-class to poor overnight. Are you going to argue this occurred because they were stupid?... or because they got hit by a tornado? Well, maybe you'll say they're stupid for living in tornado country... but that's the entire continental US, which gets more tornadoes than anywhere else in the world. Are you saying a nation of 300 million is composed entirely of morons? They why aren't they all poor?

That's just one easy ass-pull of an example of how fucking stupid your theory is. Yes, the mentally deficient are frequently poor. So are the disabled. So are the young. So are the old. Being a child entails a risk for poverty in the US, as does being elderly. So does being disabled. Being a military veteran puts you at higher risk of unemployment, and therefore poverty, but does that somehow prove all soldiers are stupid? Or could there possibly be something else at work here, like prejudice? Or perhaps military experience isn't that useful in the civilian world?

Do you know what the young, the elderly, the disabled, the stupid, and the ex-military all have in common? It's not a level of intelligence - it's that either they are less likely to have a job, or unable to have a job.

Lack of employment correlates VERY strongly with poverty. Employment at a low-paying job correlates very strongly with being near poor. Intelligent people who are laid off for extended periods can wind up extremely poor despite their intelligence. Stupid people who manage to land jobs (perhaps they are the offspring of a company owner, or the son of a former president) can be very wealthy. An intelligent person who lacks education and training (perhaps due to being poor into poverty, in an area with shit public schools and poor parents unable to save for more education) is not going to be able to land a high-paying job, however much the US worships the meme of Horatio Alger.

So... YOU proposed a direct correlation between intelligence (or lack of it) and poverty. Provide some proof, other than "Oh, I vaguely recall reading something over here about it." DETAILS. Graphs and charts. C'mon, back up your claim.

Again, I am NOT asserting the theory. I was asking if there was indeed enough evidence to knock it down. I meant 'merit' in the sense that it is indeed based on a person's nature rather than on circumstances whether they are poor or not.

Because malnourished children tend to develop less well then well-nourished children. Additionally, prenatal care can go a long way to assuring good health, both mentally and physically.

THAT is what I was asking about- did evidence of such a nature exist? Now I've gotten what I want out of this discussion, I guess I can gradually pull out of it.

[Broomstick]

Exactly how many years' living expenses was she supposed to have saved up In Case Of Economic Collapse so that she could scrape by through her fifties and sixties doing part-time jobs at semi-skilled labor? How far ahead of time was she supposed to see the need to do this coming?

Interesting point - at the time I was laid off I have six month's worth of living money in the savings which was what financial advisers have beem saying for years, if not decades, is what you should have. With the severance I got, I had an entire year's salary in the bank as I walked out the door. That was twice what was being advised. I had NO debt whatsoever - astonishing in this day and age. In other words, from a financial standpoint I was doing more than what was advised, but in actual fact I would have needed four years worth of money to weather this financial storm. WHO the hell has four years of money in the bank these days? Anyone?

But that level of savings is about what someone would have advised you to have in the bank in 2000 or 2005.

That's important to grasp- even people who were not stupid or irresponsible, who followed the mainstream financial advice through the '90s and '00s about risk sensitivity, savings, and all the rest, can still be doing very badly in an economy like this. Especially if they draw a bad hand.

^ This. Very, very, very much this. And that's why something like OWS has some traction, because a LOT of people are waking up every morning in my situation, having done everything "right" as they were told to, sometimes even doing MORE than that, and they're still living in frank poverty.

I am only doing as well as I am because:

1) I did have some savings, which slowed my slide downward (I am including some assets that could be easily liquidated, and were, during the past few years).
2) I had no debt.
3) I have family able to help me.
4) I am smart enough to figure out the Public Aid system, or to know who to go to for advice on how not to fuck myself over while applying for aid (distressingly possible).
5) I am strong and healthy enough to do almost any job, including hard manual labor.
6) And, oh yes, I have finally found steady, full time work after four years. At minimum wage (except I got a raise on Saturday, with likely more to come - I'm not going to get rich at this job, but I will be able to pay my bills and as a bonus I actually like the work.)

My financial storm is starting to taper off and end. However, there are millions who are still in the middle of their money hurricane.

[PainRack]

No, hon, being in the ER in the US can cost your over a thousand dollars in the first two hours (I speak from experience)

My dear, I'm quoting from a study that was done in the States, regarding hospital expense from visiting an ER http://www.consumerhealthratings.com/in ... cat_id=274

Is that an average? Because I know from experience one can easily run up a $1,000 bill in the ER in a mere 2 hours. I've seen it more than once.

Yup, its an average bill.

Median bills are 569 dollars according to the site so this should be the "typical" bill that most people who present to the ER has.

Visits to the ER don't neccessarily mean a real accident or an emergency, furthermore, after investigation, something troubling may not be serious. All this probably explains why the median cost is so low.

The average bill is probably a good indicator of the size ER bills can get.

I had to take the fiance to the ER just last month. They didn't do anything other than a standard set of blood tests and an injection of an anti-nausea medication. The bill was over $5000. I have "good" insurance (or at least the most expensive premiums my employer offers...), and our copay was $500.

I love the disincentive to seek medical assistance in potential emergencies, don't you?

WTF? Seriously..... How do you escalate to 5 thousand dollars based on blood investigations and anti-nausea meds>?!?!?!?!?!

That would be like 130 dollars here in Singapore, assuming you get Granisteron instead of the cheaper Odansteron.... And the only reason why I won't use that is because I have no fucking idea how much it costs....

Fuck. I'm going to go on a limb and bet that if its the standard anti nausea medication maxolon, the charges here would be 100 bucks max, probably just the standard 85 dollars.....

[Starglider]

WHO the hell has four years of money in the bank these days? Anyone?

A lot of people still have house equity equivalent to four years or more of after-tax earnings. Not as many as back in the property boom, but quite a lot of people in their 40s / 50s still own 50% or more of a $500K+ house. Of course the emotional and financial impact of liquidating a house and moving to rented accomdation is usually very high, so this is usually a last resort.

[Simon_Jester]

As you say, it's a move of last resort- you're burning a bridge behind you. Not only is it a huge source of stress, and one where depressed housing prices make it hard to get anything like the money you put into the house in the first place, but it's a defeat you're not likely to recover from. Once you sell off that home you don't have much chance of owning another one of comparable quality, not if you're around fifty years old. Even assuming you ride out this recession and have an income again, you won't have enough productive years of life to pay for another home like the one you sold to keep you going through the recession.

And increasingly, we're going to be looking at people who already did that, during the waves of mortgage foreclosures back in 2008-09, and are still in the hole.

[Stark]

I agree and that wasn't the point I intended to make, although now that you mention it is probably a minor contributing factor. The surplus of people training for and valuing financial, legal and management roles, vs engineering and science roles, helped grease the wheels of finacialisation, globalisation and deindustrialisation.

When I think back to the 'career guidance' stuff that's as thrown around in the 90s when I was in highschool, there was certainly no focus on career trajectories or even industrial research (not even 'in Queensland, mining important'). One of the few things in that essay that didn't make me laugh - I'm pretty sure I've either read it before or half the content is cribbed from Internet fairy tales - is the idea that people choose careers when young based on what are often very poor reasons. Even now, working in HR, I rarely hear people discuss more than the first few years of payscale or skills development, beyond which one's career is some kind of hand waving cloud of smoke.

However, it's worth noting that the ad-hoc approach taken by many means even many executives and managers have no real plan. The amount of coaching required for executives in transition (not redundant ok) or changing industry is significant. I'd say very few people at any level think about their career in a systematic way beyond 'that job is nice' and 'gotta cook the books for my next bonus'. If you choose 'hairdresser' or 'photographer' you're just going to struggle more in general than if you chose 'management'.

[Broomstick]

WHO the hell has four years of money in the bank these days? Anyone?

A lot of people still have house equity equivalent to four years or more of after-tax earnings. Not as many as back in the property boom, but quite a lot of people in their 40s / 50s still own 50% or more of a $500K+ house. Of course the emotional and financial impact of liquidating a house and moving to rented accomdation is usually very high, so this is usually a last resort.

Er... I don't think you quite realize just how far housing values have dropped in some parts of the US. A house that went for $500k in 2000 might well be under $200k in 2011 - which is why so many people are "underwater" on their mortgages. Also, there's the question of just how fast can you sell that house? In this area houses are staying on the market for years - I know several people who couldn't sell their homes for 3-4 years, there's just too many formerly $500k homes in foreclosure going for under $100,000 these days.

Now, I can eek out 5-6 years from $100k, but a lot of other folks can't, either because they have bigger households or have more debt or don't have medical insurance but have medical costs. While in ordinary times that half million dollar house is a good investment these are not ordinary times. As I said, what was worth a half million 10 years ago isn't worth that now. In other words, contrary to what the financial advisers were saying a decade ago, yes, real estate CAN lose its value, and in fact in very man cases it actually has done so.

[Starglider]

Er... I don't think you quite realize just how far housing values have dropped in some parts of the US. A house that went for $500k in 2000 might well be under $200k in 2011

AFAIK the sharpest drops in the whole US are in Las Vegas, where the median house price is about 45% of the 2006 high. Most places have taken a 20% to 40% drop from 2006, but that still leaves them about even with 2000 (in nominal terms);



To the best of my knowledge no US metro-sized area is down anything like 60% from 2000, although sure there might be a few small pockets where that happened.

Also, there's the question of just how fast can you sell that house? In this area houses are staying on the market for years - I know several people who couldn't sell their homes for 3-4 years

Because they wanted to minimise their loses, probably thinking prices would bounce back up. You can almost always sell fast by dropping the price well below the median for the area, but that's painful of course.

there's just too many formerly $500k homes in foreclosure going for under $100,000 these days.

Please provide a reference for that, since the nationwide average Case-Shiller drop from the all time peak is only 33%. I doubt any significant number of bank properties would go for less than 20% of the peak price, even in Las Vegas.

That said if we have another significant dip in GDP, a credit lockup and/or bank failures, you might well see those kind of drops. That would be good for the younger generation, not so good for the boomers.

[Simon_Jester]

AFAIK the sharpest drops in the whole US are in Las Vegas, where the median house price is about 45% of the 2006 high. Most places have taken a 20% to 40% drop from 2006, but that still leaves them about even with 2000 (in nominal terms);

Is that in constant dollars? Because a lot of things people need to live (medicine, food, gas for cars) are 50% to 100% more expensive now than they were in 2000. That makes whatever money you're left over with after selling your house stretch less.

And God help you if you bought the house in 2003 or 2005, when prices were high, and have only paid off a fraction of the mortgage. In a long term mortgage you're not paying very much of the principal off in the early years, after all. So you only own a small share of the house, and the house is worth less than when you bought it in the first place... you're not going to come away from that sale with a significant nest egg.

Because they wanted to minimise their loses, probably thinking prices would bounce back up. You can almost always sell fast by dropping the price well below the median for the area, but that's painful of course.

This only works if you already own most of the house, so that you can afford to eat losses on selling the house, and still walk away with 100+ thousand dollars in cash or something that you expect to keep you afloat until the recession ends (in how many years, you say?)

For all the people who moved into their new house some time in the last decade, that really isn't in the cards. The people who've lived in a house for a decade or more, and who've already paid off most of their mortgage, have a different problem. Aside from the increased trauma and physical difficulty associated with selling off a home you've had for that long, it's a big gamble. Doing that will probably increase the expected lifetime cost of shelter for the homeowner, and if they're much over forty or so it really hammers their chance of owning a house ever again.

[Ziggy Stardust]

Our ancestors survived on much less with much less.

Do you have any idea how much higher the standard of living, even for people below the poverty level, in the United States is, now, compared to 100 years ago? 1000 years ago? I hear this kind of argument all the time, and it always pisses me off. Do you know how high infant mortality rates were even into the early part of the 20th century?

My point being, there are a lot of things we can do better in our society now, but on the whole we are still a lot more progressive than our ancestors.

It used to be churches that provided that kind of human capital. In today's post-religious environment, I wonder who can step up.

Post-religious, give me a break. Are you really saying that no non-religious organization is capable of providing education and other assistance to the poor?

[Broomstick]

Here's how it can work out (example pulled out of my ass, but still connected to reality):

Pre-recession, you buy a house that, at the peak of the bubble, was assessed at $300,000.

Recession hits - >boom!< - now the house is assessed at $200,000.

You still owe $150,000 on it (let's just say - it's possible, depending on when you bought, you now owe more than it's currently worth).

IF you sell it for $200,000 out of desperation you'll net, at best, only $50,000 from the deal. And even I can only get about 4 years out of that sum, and that's assuming no disasters in the meanwhile. That would NOT be enough money to get you through the current recession without either getting a new steady job (which, remember, only took me about four years) or having some other asset to sell off or stash of money or robbing banks.

If, however, you are now underwater on the mortgage (which most certainly does happen) then even if you did sell that hypothetical house for $200,000 you would still be in debt. You would net nothing on the sale, would still owe money, and would now have even fewer assets.

It's not the house that's your asset, it's your amount of equity in the house, how much you actually own. For many who bought real estate in the past 10 years their equity is minimal. Their house isn't really an asset, indeed, it may even be a liability. Some of us who rented in the past 10 years actually came out better than some who bought houses, - true, we didn't "own" real estate, but neither were we saddled with a mortgage we couldn't pay.

[Starglider]

Most places have taken a 20% to 40% drop from 2006, but that still leaves them about even with 2000 (in nominal terms);

Is that in constant dollars? Because a lot of things people need to live (medicine, food, gas for cars) are 50% to 100% more expensive now than they were in 2000. That makes whatever money you're left over with after selling your house stretch less.

Silly Jester, don't you know that according to the US government, cumulative inflation since 2000 is only 31.5% ? You aren't suggesting that the official figures are wrong or manipulated are you? That would be downright hysterical. Why I recall in an earlier thread discussing quantitive easing, Sir Nitram himself assured me that he was seeing no significant price inflation in daily shopping. There's just no way you can counter an unimpeachable source like that.

And God help you if you bought the house in 2003 or 2005, when prices were high, and have only paid off a fraction of the mortgage. In a long term mortgage you're not paying very much of the principal off in the early years, after all. So you only own a small share of the house, and the house is worth less than when you bought it in the first place... you're not going to come away from that sale with a significant nest egg.

In that situation it might make sense to do a strategic default or contest the legality of the mortgage note. A large fraction of mortgages issued from 2000 to 2009 are technically illegal due to the MERS fiasco, and there is a decent chance you might be able to get the house for free.

Aside from the increased trauma and physical difficulty associated with selling off a home you've had for that long, it's a big gamble. Doing that will probably increase the expected lifetime cost of shelter for the homeowner, and if they're much over forty or so it really hammers their chance of owning a house ever again.

Assuming there is some equity, the choice is basically to sell the house for whatever you can get and stay out of bankrupcy a little longer, or just declare bankrupcy early. I am not familiar enough with US bankrupcy laws to know whether the courts can force a sale of the house, but if they can and they put it to auction you will probably get even less money back.

[Broomstick]

Our ancestors survived on much less with much less.

Do you have any idea how much higher the standard of living, even for people below the poverty level, in the United States is, now, compared to 100 years ago? 1000 years ago? I hear this kind of argument all the time, and it always pisses me off. Do you know how high infant mortality rates were even into the early part of the 20th century?

My point being, there are a lot of things we can do better in our society now, but on the whole we are still a lot more progressive than our ancestors.

This is so true. It's why I can say I can tolerate US poverty so long as I actually can cover my basic costs and my lack of cash isn't criminalized. I can have a warm in winter, cool in summer place to sleep, food to eat, and wearable clothes. The flush toilets and electric lights are wonderful. The local library provides books, movies, TV shows, and some social events (my crochet and knitting circles I occasionally attend are all centered on local library branches, and I know of three RC aircraft clubs who likewise meet in local branches). There are public parks. I have reasonable police protection (no fearing bandit raids).

This is WAY better than 150 years ago.

Not to mention the lack of smallpox, cholera, typhoid, etc. that used to be extremely common in urban areas, the decent sewers, etc. - just the basic sanitation one finds even in slums in the US is better than what kings had 500 years ago.

It used to be churches that provided that kind of human capital. In today's post-religious environment, I wonder who can step up.

Post-religious, give me a break. Are you really saying that no non-religious organization is capable of providing education and other assistance to the poor?

I think the non-religious organization that does that is called "the government", which, you might have noticed, some religious/conservative types are trying to starve to death. Because, you see, if people become dependent on the church (of whatever sort) for food, shelter, clothing, and education then the church becomes the government and you can kiss the First Amendment good-bye.

Of course, that's not the only reason people might oppose big (or even adequate) government, just one of many.

[Broomstick]

I am not familiar enough with US bankrupcy laws to know whether the courts can force a sale of the house, but if they can and they put it to auction you will probably get even less money back.

At present, US bankruptcy law shields your primary residence. You can not be forced to sell your primary residence when filing bankruptcy (you can certainly be required to sell any real estate outside of that, though).

You are allowed to sell your house, of course, of your own volition, but then any proceeds become vulnerable in the bankruptcy court and may well be devoured by creditors, leaving you nothing. Whether, when, and how to sell a primary residence when considering bankruptcy is best discussed with an attorney with experience in that area.

Even if the bankruptcy does not force you to sell, you might still, due to lack of income, wind up in foreclosure, at which point of course you lose the house. There are some that say that foreclosure is more of a black mark than bankruptcy is.

[Simon_Jester]

Our ancestors survived on much less with much less.

Do you have any idea how much higher the standard of living, even for people below the poverty level, in the United States is, now, compared to 100 years ago? 1000 years ago? I hear this kind of argument all the time, and it always pisses me off. Do you know how high infant mortality rates were even into the early part of the 20th century?

My point being, there are a lot of things we can do better in our society now, but on the whole we are still a lot more progressive than our ancestors.

It used to be churches that provided that kind of human capital. In today's post-religious environment, I wonder who can step up.

Post-religious, give me a break. Are you really saying that no non-religious organization is capable of providing education and other assistance to the poor?

Well, at the moment our government appears to be having trouble doing it... mostly because the nominally "conservative" political parties have become rabid individualists and now oppose all the things that traditionally were the roles of nice 'conservative' institutions in the first place.

I'm sympathetic to the idea that in the rush towards modernity we've taken a few wrong turns, forgotten a few things it would have been better to remember. The general drive of society towards progress, starting from the Enlightenment, has always had its perversions. We don't have to work very hard to find examples of "modernity gone wrong," ideologies which are self-consciously modern and which emerge out of the political discourse of the modern era, but which can have brutal, horrible consequences for the people living under them. There's fascism, the violent and oppressive forms of communism*, and plenty of others.

Even at the time, those ideas were opposed by social conservatives whose point was that the bloody transformation of society into a new 'modern' pattern wasn't necessarily a good thing, especially if it came at the expense of traditions like "thou shalt not kill." They were decried as primitives, and oppressed by societies we would now see as being as bad as anything the traditionalists did.

So can we really say that we aren't suffering right now from one of these perversions, a more subtle one without death camps? Or that some bits of "modernity gone wrong" haven't infiltrated the way of life we might call "modernity gone right?" Maybe it is worth looking to the past a bit, at the least to see if there was anything they did easily then that is made hard now by the things we cast aside on the road to the modern world.

And to me, it's looking more and more like we're going to have to accept a standard of living that looks more like the early and mid-20th century than it does like the late 20th century, only with more computers and fewer segregated water fountains. So to some extent, we're going to have to find out what it's like to make do without some of the things we now have, whether we like it or not.
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*I do not call non-oppressive, non-bloodyminded communism a perversion of modern ideals. It takes them in a different direction and I'm not entirely comfortable with that direction, but someone like Stas Bush will not, by and large, want to get rid of the things that make the modern world a good place to live. So I don't call that a perversion.

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Silly Jester, don't you know that according to the US government, cumulative inflation since 2000 is only 31.5% ? You aren't suggesting that the official figures are wrong or manipulated are you?

I'm not suggesting the official figures are wrong. I'm suggesting that the price of gas is 3.50$ a gallon when it was 1.50$ a gallon in 2000, and the price of bread is more like 2$ a loaf (rounded) now from 1$ a loaf (rounded) then.

I don't want to get into the stock arguments about government statistics, I really don't, they're a side issue. I CERTAINLY don't want my comments used as a launch pad for yet another smarmy little dig at online posters you have a vendetta against because they keep disagreeing with you.

My point is simple: selling a house now for X dollars, as compared to having sold it for X dollars in 2000, is a bad deal. Home equity is not a strong bulwark against financial disaster for homeowners in this day and age.