Begin forwarded message:
From: [EMAIL PROTECTED]
Date: July 10, 2008 2:10:43 PM PDT
To: [EMAIL PROTECTED]
Cc: [EMAIL PROTECTED], [EMAIL PROTECTED], [EMAIL PROTECTED], [EMAIL PROTECTED]
Subject: Housing Market Meltdown Will Leave Millions Totally
Dependent on Social Security
--which, of course, the Republicans want to pull out from under
their feet TOO.
But don't complain to THEM:
“You’ve heard of mental depression; this is [just] a mental
recession,” said John McCain's economic adviser Phil Gramm. “We've
become a nation of whiners.”
Housing Market Meltdown Will Cause
Massive Losses in Household Wealth
Plummeting house prices will leave millions of homeowners dependent
almost exclusively on Social Security in their retirement
For Immediate Release: July 9, 2008
http://www.cepr.net/index.php/press-releases/press-releases/housing-market-meltdown-will-cause-massive-losses-in-household-wealth/
WASHINGTON, DC- As Senators McCain and Obama fine-tune their plans
for Social Security in preparation for the 2008 presidential
election, a new report from the Center for Economic and Policy
Research (CEPR) shows that, due to the collapse of the housing
bubble, the vast majority of Americans have accumulated little or no
wealth. This means that they will be almost completely reliant on
Social Security and Medicare to support them in their retirement
years.
The study, “The Impact of the Housing Crash on Family Wealth,”
analyzed the wealth holdings of families in all age cohorts in 2004
and projected the wealth of these families in 2009. The findings are
presented by income quintile under three scenarios- real house
prices remain at current levels, real house prices fall by an
additional 10 percent, or real house prices fall by an additional 20
percent. In all three scenarios, the vast majority of these families
will have little or no housing wealth in 2009.
“This extraordinary destruction of wealth will have tremendous
implications for millions of families,” said report co-author Dean
Baker. “Coupled with a very low personal savings rate, this means
that many people, especially those near retirement will only have
Social Security and Medicare to rely on once they leave the
workforce.”
The report projects that if house prices stay the same through 2009,
the median household headed by a person between the ages of 45 and
54, those in their prime earning years, will have 24.7 percent less
wealth than did the median household in this age group in 2004.
These households will have accumulated just $113,268 in net worth in
2009, barely $15,000 more than their counterparts in 1989, whose net
worth totaled $97,600.
If real house prices fall 10 percent, the median household in the 45
to 54 cohort will see a 34.6 percent loss in wealth compared with
the median in 2004 while families in the 18 to 34 cohort will lose
of 67.6 percent. If prices fall by 20 percent, the most pessimistic
scenario, families in the 55-64 cohort will experience a loss of
49.6 percent of their wealth compared to the same cohort in 2004.
This analysis should also prompt serious re-examination of policy
proposals to cut Social Security and Medicare for near retirees.
Baker commented, “policies that perhaps could have been justified at
the peak of the housing bubble make much less sense now that tens of
millions of near-retirees have just seen most of their wealth
disappear.”
In analyzing wealth holdings for these families, the authors used
data from the Federal Reserve Board’s 2004 Survey of Consumer
Finance. The authors also used the S&P 500 and the Case-Shiller 20-
City Composite Index to adjust for equity values and home price
changes between 2004 and 2009.
###
The Center for Economic and Policy Research is an independent,
nonpartisan think tank that was established to promote democratic
debate on the most important economic and social issues that affect
people's lives. CEPR's Advisory Board of Economists includes Nobel
Laureate economists Robert Solow and Joseph Stiglitz; Richard
Freeman, Professor of Economics at Harvard University; and Eileen
Appelbaum, Professor and Director of the Center for Women and Work
at Rutgers University.
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