Alan Brochstein

Wealth Watch: Redefining Rich and Poor In a Shrinking Global Economy

jstratt,

Thanks for your comments. I would like to share a conversation I had with my wife's uncle this morning. He relies upon me from time to time to share my views on economic and financial matters.

I told him that I expect unemployment could reach as high as 12%, but that his world is actually a better place. As he said, lean times aren't the end of the world. He lives well within his means. His wife's job is at risk, but his is secure. For the 88% who aren't unemployed, there will be challenges, but there are also opportunities.

In any event, your ideas are great. Maybe things aren't as bad as I now fear, but no one will be worse off for doing as you say and rationalize finances. The biggest part to me is seeing what you can do without, seeing where you can "trade down".

Do you really need to order that dessert at a restaurant? Do you really need all those extra channels on cable? All of us has some amount of excess in our lives, and we might find that diminishing the excess actually offers us benefits. Whether it is spending more time with our children, helping our neighbors in the community or enriching our spiritual lives, we can all appreciate that these opportunities will be there for us even if the economy falters.



On Jan 11 11:42 AM jstratt wrote:

> Excellent Analysis - but lets move forward
>
> The world may go to hell in a hand basket or it may not and for the
> record I agree with many of your points except for the depression
> conclusion. A better question is What can we do now to move ahead
> regardless of what happens?
>
> It is my recommendation that those with some wealth begin to take
> a corporate approach to their finances. That is to create a balance
> sheet, income statement, budget and strategic plan.
>
> If you will take these actions it will be easy to see how to improve
> and yes grow your wealth. In times like May your rosy outlook may
> be tempered and in January your depression conclusion tempered as
> well.
>
> With a well thought out plan most people can move their wealth ahead.
>
>
> That said I dont think most people understand how hard people in
> general have been hit in this recession and you do a good job of
> bringing that out. Let's estimate that all assets dropped in value
> by 20% in 2008. What was the impact on the person with a 50% debt
> level vs a 0% debt level?
>
> The average household is roughly 50% debt and a 20% drop in assets
> implies a 40% drop in wealth for these people.