patrick.net

Conventional wisdom is that there is always something to buy in a bear market and sell in a bull market. However, if the long-term deflationary debt unwind thesis is correct, the point of recognition will result in the simultaneous decline of virtually all financial assets.

Under those circumstances, shopping for bargains among the rubble is like groping around in a pile of knives. This is a difficult concept to grasp, especially given the length and magnitude of the secular bull market in social mood and, subsequently, financial assets, that brought us to this point. But the reality is that during a deflationary debt unwind there are no good long-term investments other than cash.

FWIW, Greenspan will go down in the history books as the biggest villain in the current financial mess and a whole lot of people already see it that way.

It's also galling to picture Greenspan getting a medal from GW Bush. That really says more about Bush than Greenspan.

(It's a lot like "You're doin' a heckuva job, Brownie!" It shows how lame Bush is. But, beware: Obama is not looking any better at this point! It's just more of the same old garbage, I'm afraid.)

While history will show Greenspan is a loser, the top 10 list is correct to point out that people can only blame themselves in the end.

Some of us didn't fall for the 'Good Times' temptations offered by nearly free money.

Some of us were raised to believe "There's No Such Thing As A Free Lunch" and to be VERY suspicious when something (like a half million dollar McMansion with nothing down, 125% financing and interest only payments at 1%) looks too good to be true.

I'm a saver and I've worked very hard and saved very hard for decades to pay off my house and have a wad of cash. I intentionally live way below my means.

1. Good Times
2. Alan Greenspan (lost to a 1970s comedy series?)
3. Twisted Regulation
4. Wall Street
5. The Homeownership Obsession (not HGTV?)
6. Too Much Money (see #2)
7. The Myth of the Rational Market (damn economists)
8. You and Me (hey, speak for yourself)
9. George W. Bush
10. Commodity Futures Modernization Act

My plan was to earn 5-6% interest in bank CDs and retire early and live off the money.

That plan isn't working out so well with interest rates at ridiculously low levels and, to me, the threat of runaway inflation too real.

I avoided the stock market because, as a finance major in college, a former banker and bankruptcy lawyer, I could see that it was a corrupt, Vegas-style, gambling mess with no real substance and huge risk at the ridiculous price levels for almost all stocks.

I had adjusted to the fact that our government encourages borrowing by making the interest deductible and discourages saving by taxing the interest.

I honestly never thought it would go so far as it has to punish savers and reward borrowers. The current 'bailout' fad is simply stunningly unfair.

Greenspan's policies (and now Bernanke's) have made it hard to justify saving money. It's such an insult to get the paltry 1% interest each year and then have to pay taxes on it!

I heard Obama and his surrogates openly state that they want to "get Americans back to where they can borrow money to buy the things they want again."

To me, that is just an amazing thing to admit. You know we're in deep trouble when the new POTUS can say that and almost no one even notices or objects.

Debt is a way of life in America and it will sink us.

I have said for years that I feel as if I'm a 3rd class passenger who is locked below decks aboard the Titanic. I didn't do anything wrong but I'm screwed.

It's a little worse than that because I could see the iceberg coming and I've been yelling to anyone that would listen for years. But no one in power, except Ron Paul, seemed to hear me or agree with me.

That's how I found this blog and I then began to realize that thousands of people saw it coming, too. If all of us 'regular' people could see it coming, how is it that all the powerful geniuses in Washington and on Wall Street couldn't see it coming?

I decided that these powerful people are either liars or wildly incompetent - or BOTH! For that final conclusion, Greenspan is the poster boy.

Obama will still be conducting and his musicians will still be playing as the stern of the USS AMERICA slowly sinks into the dark, cold abyss.

It's a sad story...

People borrowing for large purchases does stimulate the economy. I think you might be taking Obama slightly out of context. To me it seems like it has been a failed Republican strategy to encourage debt to buy foreign goods, because in destroying the labor market with foreign outsourcing that is the only way that someone who used to make $25/hr can buy something when they now only make $15/hr.

The reason I am encouraged by Obama is because he seems to get it. He understands that the way to bring the country back to health is to get people working on worthwhile jobs which pay well. When this happens a lot of other problems go away. People will have the same purchasing power but won't need debt to subsidize their normal standard of living, and having a large middle class creates all sorts of opportunities for the private sector.

Fuck the democrats. Fuck the Republicans. Debating this is like talking about the difference between a louse and a flea.

Let's talk about what you're shorting.

California may have to cut prison population by 40 percent

Hey I have a brilliant idea; legalize pot, tax it 100% and let all the heads out of jail!

Free Willie, man!

Perma,

Good list of the perpetrators, especially for who it did NOT list.

There have been too many lists floating around that are trying to smokescreen the real perps by trying to place the blame in wrong places.

Let’s talk about what you’re shorting.

So... what are you shorting? :)

California may have to cut prison population by 40 percent

Fast-track Death Penalty is the way to go. It is ridiculous to put someone behind bars for more than 10 years.

Alrighty, then.

What is worst is California prefers to take the abilities of the law abiding citizens to defend themselves away.

What is worst is California prefers to take the abilities of the law abiding citizens to defend themselves away.

I agree. If guns are outlawed then only outlaws will have guns.

Short US Treasuries!

The odds seem good that rates must rise to deal with inflation and uncertainty, and this will drive down bonds which pay nearly nothing.

How exactly to short Treasuries is beyond me. I don't like mutual funds of any kind (been burned by taxable "distributions") and I don't understand futures.

The sweeping $789 billion stimulus bill is expected to create thousands of clean-tech jobs in Silicon Valley, gin up new business for many of the region's tech companies and put hundreds of dollars in the pockets of most residents.

Parts of the bill of special interest to the valley include $30 billion for a smarter electricity grid, improved batteries and energy efficiency; $20 billion in tax incentives for renewable energy and energy efficient projects; and $19 billion to create electronic health-care record systems.

It also provides tax credits of up to $400 per worker and $800 a family, phasing out for individual taxpayers earning $100,000 per year and couples earning $200,000.

Another feature of the package allows consumers to deduct sales and excise taxes paid when buying new cars and trucks. Stephen Smith, president of the Silicon Valley Auto Dealers Association, said the incentives could spur on "many new car buyers who have been on hold for some time."

Valley clean-technology companies said Thursday that they anticipate adding thousands of employees in the next few years as result of the stimulus bill that's headed for President

"We'll be hiring hundreds of people over the next 12 to 18 months," said Kevin Surace, president and chief executive of Serious Materials, a Sunnyvale company that makes green building materials. His company's ultra-insulated windows fit perfectly with the stimulus bill's goal of spending $5 billion to weatherize up to 1 million homes a year, he said. Serious Materials is adding factory space to meet the anticipated demand.

The stimulus plan will "catapult the U.S. to be the world's largest solar market by the end of 2010," predicted Suvi Sharma, CEO of Solaria, a solar-cell maker in Fremont.

Solaria and SunPower, the San Jose solar-module maker, said the stimulus package could speed up their plans for U.S. production.

"For some time, we've considered expanding our manufacturing footprint in the U.S. beyond our modest facility in Richmond," said Julie Blunden, a SunPower vice president. "This could certainly accelerate our thinking about where and when we could deploy."

Nationwide, the Solar Energy Industries Association forecasts that the stimulus package will create 67,000 solar jobs in 2009, and 119,000 in total through 2010.

Networking companies Cisco Systems and Juniper Networks are sure to get a chunk of business from the billions of dollars being funneled into broadband and smart-grid projects. Likewise, Intel will be able to provide processing technology to various new infrastructure work, including high-speed rail projects, which will receive $8 billion in federal funding.

"They all will get some pop," said Silicon Valley tech analyst Rob Enderle.

Even Internet companies, from Google to e-commerce start-ups, could eventually garner indirect benefits from the $7 billion in grants that will be available for companies and public entities to expand broadband to rural and inner- city communities.

"If more people are wired, then more people will be consuming advertising," Enderle said.

Sun Microsystems, which does more than $1 billion in business with the federal government every year, expects to compete for hundreds of millions of dollars in new business, from providing software for the electronic health-care initiative to selling energy-sipping servers, said Bill Vass, president of Sun's federal division.

Sun, like other valley companies, doesn't expect an immediate uptick in job hires, he added.

"This will ease up the cutting at first," Vass said. "As this government spending occurs, it will spawn demand and we will go through a hiring cycle."

Patrick,

It is very likely that inflation is coming. And that will eventually drive longer rates up accordingly.

But there could be a sizeable lag on that. Treasurys could stay in favor for a while as investors all over the world continue put their money into the safest parking space in the world - US Treasury Bonds.

So shorting Treasury bonds could be painful for a long time. This might seem irrational to some. However, as Keynes once said: Markets can stay irrational longer than you can remain solvent.

We are currently in a negative mania/panic. Don't bet the farm on rational behavior taking hold in the near future. It is an old saying: You will never go broke betting on people's stupidity.

The nest egg of the typical American family is smaller now than it was seven years ago, according to Federal Reserve data released Thursday.

The inflation-adjusted net worth of the typical family increased 17.7% to $120,300 from 2004 through 2007, the Fed said Thursday in its Survey of Consumer Finances, the most detailed look at family finances available. Net worth is defined as assets minus liabilities.

"But a lot has happened" since the end of 2007, a Fed economist said. As of October, median net worth had fallen to $98,900, down 3.2% from the end of 2007 and 2% below the level reported in the 2001 survey that was conducted after the dot.com bubble burst. Since October, stock prices have fallen another 15%, while home prices have fallen at least 2%.

If guns are outlawed then only outlaws will have guns.

Whoah.

Can I quote that? Never heard it before!

Capitalism Needs a Sound-Money Foundation
Let's give the Fed some competition. Abolish legal tender laws and see whose money people trust.

Let's go back to the gold standard.

If the very idea seems at odds with what is currently happening in our country -- with Congress preparing to pass a massive economic stimulus bill that will push the fiscal deficit to triple the size of last year's record budget gap -- it's because a gold standard stands in the way of runaway government spending.

Under a gold standard, if people think the paper money printed by government is losing value, they have the right to switch to gold. Fiat money -- i.e., currency with no intrinsic worth that government has decreed legal tender -- loses its value when government creates more than can be absorbed by the productive real economy. Too much fiat money results in inflation -- which pools in certain sectors at first, such as housing or financial assets, but ultimately raises prices in general.

Arnold Schwarzenegger and state legislators have reached a tentative deal to solve the massive $40 billion budget shortfall.

As might be expected from the state with one of the biggest housing bubbles and some of the most profligate government spending in recent years, the news isn't good.

There are a raft of spending cuts, but here's a summary of the tax increases:

State sales tax to increase one cent from roughly 8 percent to 9 percent, depending upon the area, almost 10 percent in some areas

State income taxes to rise either 2.5 or 5 percent across the board via a "surcharge", depending upon the amount of Federal assistance, boosting the effective marginal tax rate to either 9.5 or 9.8 percent for amounts over $40K

Gasoline tax to increase 12 cents to 39 cents a gallon for a total tax of 76 cents per gallon

Vehicle license fees to almost double, from the current 0.65 percent of a vehicle's value to 1.15 percent

That's really going to add up - on a percentage increase basis, that's about a 12 percent boost for sales tax, a 2.5 to 5 percent increase in income tax, a 44 percent increase in the gasoline tax and a whopping 77 percent increase in the vehicle tax.

California is already one of the highest tax states. The CA legislators have been spending money like drunken sailors for decades.

These increases look like about $125 to $200 per month for the average household.

Nvidia is also instituting company-wide salary cuts. "The executives of our company took the largest and most significant cutbacks," said Huang in the earnings conference call on Tuesday. But he added that it affects "almost all of our employees," is "broadbased and it's everywhere."

On Thursday, senior vice president Dan Vivoli, in a phone interview, said that executives "don't get any of their variable this year" which, in some cases, is a large part of their pay. There will be a broader pay cut too. "We decided to do a five percent across-the-board pay cut," Vivoli added.

NetApp Inc., another Silicon Valley company, announced its own job cuts yesterday. The maker of storage equipment plans to eliminate about 540 workers, or 6 percent of its staff.

Aehr Test Systems, a supplier of semiconductor test and burn-in equipment, said Thursday it will restructure to cut expenses and eliminate about 20 percent of its employees.

Fremont-based Aehr (NASDAQ:AEHR) also said it will cut salaries and shut down its facilities for one week each quarter.

The company did not disclose the amounts of salary cuts or which individual jobs would be eliminated.

"The expense reduction actions announced today are a painful but necessary measure in light of the current economic slowdown and the negative outlook for capital expenditures in the semiconductor industry," said CEO Rhea Posedel. "The reduced cost structure resulting from these actions will help us to maximize our cash position, while also enabling the company to continue investing in the product development and marketing initiatives that will position us to expand our customer base and grow market share as economic and industry conditions improve."

The deepening recession is speeding up the shakeout in Silicon Valley, forcing droves of start-ups to shut down or sell themselves at fire-sale prices.

Many start-ups survived last year by slashing costs and deferring development projects. But as demand for their products continues to deteriorate and funding dries up, these young firms are now running out of lifelines. Many are calling it quits, recalling the dot-com bust earlier this decade.

'You're going to see a major shakeout,' says Martin Pichinson, a wind-down specialist, above. Jeff Yasuda, below, plans to shut down his music site, Fuzz.com.

In recent weeks, start-ups with names such as Attune Systems Inc. and Reactrix Systems Inc. have wound down their operations. Others including Guava Technologies Inc. have sold themselves off for sums far less than what their investors spent on them.

"Start-ups are failing faster and you're going to see a major shakeout," says Martin Pichinson, a managing director of Sherwood Partners, a Mountain View, Calif., firm that specializes in winding down start-ups. Since mid-January, his firm has shut down an average of three start-ups a week, up from just one or two closures a month in September, he says.

Among the companies that Sherwood is currently closing is Allux Medical Inc. The Menlo Park, Calif., firm, which made devices to treat dermatological problems, had raised more than $11 million in funding. In December, Sherwood also closed down Reactrix Systems, a Redwood City, Calif., interactive media firm that had raised more than $45 million. Mr. Pichinson declined to detail the shutdowns.

Jeff Yasuda, founder and chief executive of San Francisco-based online music start-up Fuzz Artists Inc., plans to shut down his Web site on Friday after deciding he couldn't drive enough visitor traffic to it to make it a viable business.

As he winds down Fuzz.com, Mr. Yasuda has cut his staff to four people from 12. He still has some money from investors and is working with his remaining staff to preserve a service called Blip.fm, which lets users share short messages about music.

"It's just brutal," says the 36-year-old Mr. Yasuda. "Had the markets been different, I would've been able to raise a lot more capital and maybe I could've given it more of a shot."

The troubles aren't limited to Silicon Valley. VuBotics Inc., an Atlanta maker of software for wireless devices, filed for Chapter 11 bankruptcy protection in November, while nTag Interactive Corp., a Boston maker of high-tech name tags, filed for Chapter 7 bankruptcy protection the day after Christmas.

That such shutdowns have reached tech start-ups shows how far the recession has spread from its Wall Street and housing-sector roots and how it now could slow innovation.

Start-ups are typically where innovative products and services are created, says Richard Mammone, a professor at Rutgers University who has also started several tech companies. In normal conditions, the market rewards the best young companies and only the nonviable ones go bust. But in this economy, "it's not survival of the fittest," he says.

Venture capitalists pulled back sharply in the fourth quarter as credit markets seized and stock markets collapsed. Venture capitalists invested $5.54 billion in U.S. start-ups in the fourth quarter, 27% less than the third quarter, according to data compiled by VentureSource.

Rich Brenner, who runs a Cupertino, Calif., firm that specializes in restructuring start-ups, says this downturn is hurting Silicon Valley companies differently than the dot-com bust, when Internet companies that "should have never been funded" disappeared almost overnight.

This time tech companies aren't at the epicenter of the bust, and failures will take time to play out. Still, "the needle has shifted precipitously in the last six months and now we're starting to see more and more companies strategically stalled," Mr. Brenner cautions.

Attune , a Santa Clara, Calif., software maker ceased operating in December even though employees say the firm had money to keep going through early 2009.

Alan Kessler, Attune's chief executive, says start-ups of Attune's size are highly dependent on partnerships with larger companies and when the markets tumbled, many of those bigger companies "froze."

As a result, Mr. Kessler says he decided the most realistic route for the 25-person company was "to pursue a path to wind down." In November, he announced Attune -- which has raised more than $14 million in funding -- would shut down.

"You fight the good fight and do the best you can," says Mr. Kessler, who last month rejoined 3Com Corp. as a senior executive.

Other start-ups are being pushed by their investors to sell themselves off, even at depressed prices. Jonathan MacQuitty, a venture capitalist at Abingworth Management Ltd. and a board member of Guava Technologies, says he recently encouraged the bioscience company to sell itself.

Demand for Guava's products -- instruments that do cell-based analysis -- have tapered off as pharmaceutical and biotechnology companies reined in their spending, says Mr. MacQuitty.

So earlier this month, Guava agreed to sell itself to Millipore Corp. for $22.6 million; investors had put more than $50 million into the Hayward, Calif., company. The sale price was little more than Guava's revenue, which totaled about $22 million in 2008.

"It wasn't a particularly attractive price but at the same time, if Guava tried to persist, it would have taken a lot of time and money to wait out the current situation," Mr. MacQuitty says.

Overall, 15 U.S. private companies backed by venture capital were sold in January for an average price of $5.7 million. That's down sharply from the average price of $44.2 million that 26 venture-backed U.S. companies fetched in January 2008, according to research firm 451 Group.

For some companies, the shakeout is an opportunity. DemandTec Inc., a San Carlos, Calif., maker of online software for retailers, last month acquired Connect3 Systems Inc., a Cerritos, Calif., start-up that also makes software for retailers. DemandTec bought Connect3, which generated about $8 million in annual revenue and no profits, for $12 million.

Dan Fishback, DemandTec's CEO, says his firm had long been interested in purchasing Connect3 but last year would have had to pay twice as much. Now "it's a buyers market," Mr. Fishback says.

Schwarzenegger is a liberal.

They could simply layoff 50% of the state government. People of California will discover that nothing has changed. So we can afford another 50% layoff and then yet another 50% layoff.

Before we know it, we will have 0% state income tax!

But Schwarzenegger's successor may be even scarier. Perhaps it is time to leave California.

PermaRenter Says:
The deepening recession is speeding up the shakeout in Silicon Valley, forcing droves of start-ups to shut down or sell themselves at fire-sale prices.

About two years ago, I began advising all my friends to avoid joining start-ups - no matter how compelling their "plan" sounded on paper. I was hearing rumblings of unease and difficulty in getting the next round of funding. Didn't seem worth the hard work and pressure, to be left holding a steaming bag of risk and nothing else.

Some of them listened, but a few didn't - and are now back looking for a 'stable' job with a big company.

# Peter P Says:
But Schwarzenegger’s successor may be even scarier. Perhaps it is time to leave California.

It is an easier plan to just make your _money_ leave California.

California is just plain stupid. Its legislators think that professionals and wealthy people are as clueless as themselves and their primary constituents.

This global trend of bailing out failures is alarming.

From Patrick's links:

Obama eyes home loan subsidies in rescue plan-sources

http://news.yahoo.com/s/nm/20090212/ts_nm/us_financial_bailout_housing/print?ref=patrick.net

Democrats just don't get it. Republicans aren't much better nowadays. We are doomed.

GWB should be held responsible for losing the Congress to the Democrats. He should have done more to expand his party and conservatism in general. Now I really start to dislike him. :(

Last night after watching C-Span, I realized why the US is so f*cked up.

Among the Congressmen and banking executives at the hearing, about 1/4 have a face so red that I started thinking maybe my TV color tuning was off. Along with that red face is the enlarged, swollen nose tip, very typical symptoms of chronic alcohol OD. Ken Lewis even has popping eyes to go with all the above obvious symptoms, making him look exactly like a deer caught in the headlight. Congressmen side are just equally guilty, some of them ask such stupid and open-ended naive questions that makes one wonder either their aides are morons or too lazy to do the homework. One Congresswoman resorted to yelling, what a disgrace.

We are a country run by a bunch of morons, alcoholics and criminals.

The only impressive Congressman who asked pointed questions with a sense of humor is Brad Sherman, HLS grad, no wonder.

Some of the Congressmen and Congresswomen are so damn stupid that I feel so sorry for their voters. So many of them took out some complaint letters from their constituents asking about credit card rate hike and foreclosure on these specific cases to a banking CEO. What the hell do they expect? These CEOs don't care and don't know about these specific cases, they are not even responsible for the specific lending guidelines.

It seems like these moron Congress reps are just yapping away to make sure they get their share of air time. They don't understand the issues and don't even know how to ask a meaningful question. One Congressman even asked the CEOs, "do you think you need the bailout?" What kind of answer did he expect?

We are a country run by a bunch of morons, alcoholics and criminals.

Because enough voters are morons.

Honestly, just based on watching C-Span, CA has probably the most moronic and sharpest politicians in the country.

One Congresswoman that shouted about her cause and asked shockingly stupid questions in disturbingly incorrect grammar is from CA. On the other hand, Diane Feinstein has always been very regal, sharp, and witty. Brad Sherman is humerous and right on top of these issues.

The quality of politicians is reflective of the quality of their voters. CA is just a place that is extremely bi-polar.

CA is just a place that is extremely bi-polar.

CA has some of the richest people and the "poorest" welfare leeches. It seems our high rate of taxation and the myriad of welfare programs still would not distribute wealth "fairly."

Rush Limbaugh once said...

Poverty and Suffering are not due to unequal distribution of goods and resources, but to the unequal distribution of capitalism

"We are a country run by a bunch of morons, alcoholics and criminals."

Of the morons, by the morons, and for the morons...

You can fool some of the people all of the time, and all of the people some of the time (at least once every four years).

@PermaRenter,
That's an interesting summary of some local start-ups. One has to wonder what is more important here--to secure renewed VC funding, or to actually run a profitable business?

"In normal conditions, the market rewards the best young companies and only the nonviable ones go bust."

How does "normal" ever describe SV? business trends? No, it's more like--the market rewards companies that garner investor money and keep a positive loop going. Here, "nonviable" more accurately describes companies which lose their so-called "lifeline", ie venture capital. Notice where these businesses place their hope--it's not their actual market/end-user. I suspect we're on the same page here to observe the systemic frailty of pursuing business ventures...based on excessive liquidity. It's not enough we have stupid govt., we have stupid "entrepreneurs" too.

So... the world did not end at 1234567890. Next time to watch: 13.0.0.0.0

Savoring win, Obama celebrates `major milestone'

WASHINGTON (AP) — Savoring his first big victory in Congress, President Barack Obama on Saturday celebrated the newly passed $787 billion economic stimulus bill as a "major milestone on our road to recovery."

Speaking in his weekly radio and Internet address, Obama said, "I will sign this legislation into law shortly, and we'll begin making the immediate investments necessary to put people back to work doing the work America needs done."

Blackwater Worldwide, a private security company whose work in Iraq was plagued by trouble, said yesterday that it is changing its name to Xe as it shifts its business focus.

Anne Tyrrell, a spokeswoman for the company, said it was changing its name because "the idea is to define the company as what it is today and not what it used to be."

"We've taken the company to a place where it is no longer accurately described as Blackwater," she said.

RJ Hillhouse, a national security expert and author of the blog called The Spy Who Billed Me, said the company is "obviously trying to distance itself from their image as reckless cowboys that's etched into the world's mind from the September shooting. With a new name, "there are a lot of people who probably won't connect the dots," she said. "In a year or two, people won't remember that's Blackwater."

The Economists Who Missed the Housing Bubble Are Coming After Your Social Security

By Dean Baker - February 13, 2009, 4:13PM

Word has it that President Obama intends to appoint a task force the week after next which will be charged with "reforming" Social Security. According to inside gossip, the task force will be led entirely by economists who were not able to see the $8 trillion housing bubble, the collapse of which is giving the country its sharpest downturn since the Great Depression.

This effort is bizarre for several reasons. First, the economy is sinking rapidly. While President Obama's stimulus package is a good first step towards counteracting the decline, there is probably not a single economists in the country who believes that is adequate to the task. President Obama would be advised to focus his attention on getting the economy back in order instead of attacking the country's most important social program.

The second reason why this task force is strange is that Social Security doesn't need reforming. According to the Congressional Budget Office, it can pay all scheduled benefits for the next 40 years with no changes whatsoever.

The third reason that this effort is pernicious is that this talk of reform is occurring with the baby boomers just as the cusp of retirement. Due to the reckless policies of the Rubin-Greenspan-Bush clique, this cohort has just seen their housing equity wiped out with the collapse of the housing bubble. Tens of millions of baby boomers who might have felt reasonably secure three years ago are now approaching retirement with little or no equity in their homes.

Similarly, if they had been fortunate enough to accumulate any substantial amount of savings in a 401(k) account, they just saw much of this wealth vanish with the plunge in the stock market. The median late baby boomer household (ages 45-54) has a net worth of just over $80,000 including the equity in their home. This means that if they took all of their savings, they would have less than half of their home (assuming a median price $175,000) paid off, and nothing else.

The median household among older baby boomers would be doing a bit better. With a net worth of $143,000, this household could have most of their home paid off, but nothing else. And of course, half of the population has wealth less than the median, so they would be less well-prepared for retirement.

In short, the vast majority of baby boomers will be approaching retirement with little other than their Social Security and Medicare to support them. And now President Obama is apparently prepared to appoint a commission that will attack these only remaining pillars of support.

It is especially infuriating that this task force is likely to headed up by economists who somehow could not see an $8 trillion housing bubble. The incompetence of such economists has inflicted enormous pain on billions of people around the world. However, unlike people who fail in other professions, economists who mess up on the job just get promoted so that they can do even more harm.

My guess is that this task force will not be very popular except at the Washington Post and on Wall Street.

Dean Baker speaks the truth,especially the last two paragraphs.