Category Archives: money

America’s Federal Deficit: $52,700,000,000,000

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With the current financial crisis many people blame Wall Street and the “greed” factor for the fact that the economy seems to be hitting the wall. However, that’s only part of the picture. America has been living on the financial edge for quite some time. The federal government has accumulated $52,700,000,000,000 Dollars of dept and committed financial obligations, roughly US$455,000 for every household. The average household income is about 1/10 of that.

Total Federal Burden
$52,700,000,000,000

Every American’s Share
$175,000

So it’s time to save some cash. It has gotten so bad that, that more and more people are trying to create more awareness and do something about it. There is even a movie about it, supported by people like investor Warren Buffett.

Download yourself the citizens guide to understand more about this.

The Wall Street Crisis: Why, Who, What, Where, How, Relief?

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Yesterday on my way home I listened to the NPR radio show “fresh air” hosted by Terry Gross. Financial reporter and New York Times columnist Gretchen Morgenson was there for an interview about the current financial crisis on Wall Street and why it happened, who did it, what happened, where the impact can be seen and felt, how it came to where we are and how it might be solved, and whether that could be real relieve or not.

I have to say, after watching Cramer for a few days in a row now, reading the WSJ, and digging through various sites on the Internet, I thought this was probably the best summary I have heard so far. I highly encourage you to spend the 40 minutes and listen to the interview, as the $700 billion bailout come out of your pocket if you are here in the U.S. and the crisis has most likely affected you already, no matter where you are.

America Is All About (Mad) Money

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One thing that strikes people from the outside is how obsessed America is about money. Money matters, and is discussed everywhere. That’s not to say that everyone is smart and educated about money, but simply means that money is an omnipresent topic in the society and media. A lot of people actually leave money on the table by not contributing to their retirement accounts, even though their employer would match a part of it.

Dedicated TV stations like CNBC or Bloomberg broadcast 24h about the global and domestic stock market, but those you can find in almost all developed countries. What’s different here the interest in how the rich are living their life, how much money they have, and all the good stuff you can buy with money. That is obviously of great interest since the consumer consumption accounts for about 2/3 of the gross domestic product.

One especially noteworthy item are all the shows about the American Dream – how people made it and how you can make it too. TV shows are often a reflection of the culture they are created for, so check out the following examples to get a better understanding of the different aspects of the money theme happening here. See Donald Trump’s “The Apprentice” and Suze Orman’s personal finance show, Tyler Mathisen’s “High Net Worth”, Erin Burnett’s “The Millionaire Inside”, and especially Donny Deutsch’s “The Big Idea” and Jim Cramer’s “Mad Money”.

You should check out the soundboard for the show… ;-)

The Rich Are Getting Richer …

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Well, in technical terms, one could say the average tax rate of the richest 1% of the country has fallen and not kept up with their share of income. The WSJ reported a few days ago that according to the latest IRS data “the richest 1% of Americans in 2006 garnered the highest share of the nation’s adjusted gross income for two decades, and possibly the highest since 1929″.

“According to the figures, the richest 1% reported 22% of the nation’s total adjusted gross income in 2006. That is up from 21.2% a year earlier, and is the highest in the 19 years that the IRS has kept strictly comparable figures.”

“The average tax rate in 2006 for the top 1%, based on adjusted gross income, was 22.8%, down slightly from 2005 and the fifth straight year of declines. The average tax rate of this group was 28.9% in 1996, and was 24% in 1988.”

I guess it is like almost everywhere else in the world. If you work as an employee and cannot invest and offset your gains you will most likely pay too much taxes compared to others, in relative terms. But then again, not everybody is willing to take the risks associated with it. But there comes a point where you wonder how much money people do need or should have, and whether this is a healthy trend for the rich in the long run. But that is a more philosophical discussion.