patrick.net

Consider also that the rate is aggregate. If you have half of a population that saves 10% of take home, but the other half overspends take home by 20%, the aggregate would show about a -10% savings rate. Even if the thrifty do not increase their savings rate, a sudden inability for the overspenders to borrow would drasticlly increase the savings rate. Individual savings did not increase, but the savings rate "increased" because overspending was curtailed.

I believe that we have a large portion of the population that always were savers. After all, something like half the homes in USA have no mortgage, and there must have been a reason for the increase in FDIC to $250k. Also, ABC news did mention that in the "Cash for Clunkers" program, the dealers they interviewed said the buyers overwhelmingly paid cash. I also presume that the surge in homebuying all over the news today is fueled by savers finally deciding to buy. The savers were just outgunned by the overspenders, which until the overspenders lost credit access, kept the savings rate negative.

I believe that we have a large portion of the population that always were savers. After all, something like half the homes in USA have no mortgage, and there must have been a reason for the increase in FDIC to $250k.

Well, I'm going to hazard a guess and say that for all of those fully paid mortgages a sizable percentage were borrowed against, especially near the apex of the bubble. By the way, didn't I read something recently about the FDIC running on fumes?

Also, ABC news did mention that in the “Cash for Clunkers” program, the dealers they interviewed said the buyers overwhelmingly paid cash.

An overwhelming majority paid in cash? I'd like to see ABC's numbers. With the way auto dealerships were hurting, buyers could have gotten 4K written of the price simply for paying in cash in the first place. And why, if you have 15 to 20K in cash assets, would you buy an instantly depreciating asset?

I also presume that the surge in homebuying all over the news today is fueled by savers finally deciding to buy.

I don't really see that. I think the surge of buyers, including the last-gaspers right now has more to do with the expansion of FHA and the soon to expire 8K tax incentive, as well as some decidedly roseate reporting on the economy by the mainstream media outlets. The majority of savers that might have been straddling the sidelines were likely those with bubble-equities socked away, waiting out the storm.

Study: Most Americans say homes are good investments
The Business Journal - August 19, 2009

While 25 percent of Americans owe more on their mortgage than their homes are worth, about 92 percent still believe a house is a good investment, according to a new survey.

Although nearly half of Americans worry about losing or being unable to afford their home, more than nine out of 10 of respondents said they believed a home was still a good investment, according to the study by Bankrate Inc.

And despite rises in the national savings rate, many Americans haven’t changed their savings habits. Only 17 percent said they had increased their savings, while 44 percent saved the same amount as before and 36 percent were saving less. Also, only 35 percent of employed Americans have adequate savings to weather a job loss lasting more than six months.

“These results provide an interesting illustration of the public's mindset in a difficult economy,” said Julie Bandy, editor in chief at Bankrate.com. “While nine out of 10 still believe in the American dream of homeownership, nearly half worry about losing their homes. And even though American families are worried about reaching other financial goals – most notably retirement – most appear to be unable to save more money.

Nearly 10 years of housing bubble mania will not die easily. Everyone I know is certain prices will quickly rise again, everyone.

Austinhousingbubble says

Well, I’m going to hazard a guess and say that for all of those fully paid mortgages a sizable percentage were borrowed against, especially near the apex of the bubble.

Pre-bubble I often heard that half the homes were owned free and clear. Post bubble seems to have reduced it to a third. I would think that the term "free and clear" indicated below means no equity loans either.

From the US Census:

"Among the 75.6 million homes that were owner-occupied, 24.9 million units, or one in three, were owned free and clear without a mortgage"

http://www.census.gov/Press-Release/www/releases/archives/housing/012760.html

Austinhousingbubble says

By the way, didn’t I read something recently about the FDIC running on fumes?

Wouldn't FDIC running on fumes mean that the FDIC made lots of payout to savers? And wouldn't the increase in FDIC fees to member banks indicate thet the FDIC knows there are lots of savers still left to insure?

Tude says

Nearly 10 years of housing bubble mania will not die easily. Everyone I know is certain prices will quickly rise again, everyone.

I got some underwater parcels to sell everyone you know! They can only go up!

Wouldn’t FDIC running on fumes mean that the FDIC made lots of payout to savers? And wouldn’t the increase in FDIC fees to member banks indicate thet the FDIC knows there are lots of savers still left to insure?

Perhaps; my suspicion was that the increase to 250K was designed to create a greater sense of security among people putting any future earnings into the banks. What I didn't conclude was that there are lots of savers - though I suppose that depends on how we quantify lots.

I get the feeling you are a classic saver with more fiscal acuity/ability than that of the average American family. And, despite all the reporting on increased savings rates, I think you are a dying breed. Just ask Elizabeth Warren.

mania will not die easily. Everyone I know is certain prices will quickly rise again, everyone.

It's like the people who think that anything old is an antique and, therefore, automatically valuable. You will rarely convince them otherwise.

Austinhousingbubble says

Just ask Elizabeth Warren.

Elizabeth Warren said savers were a dying breed? Anyway, I liked her reponse to the MSNBC question about if Paulson's $700 bank bailout was a bad idea:

"You know, let me say it this way. The question about whether or not the world as we know it has ended, depends on what you think the world is as we know it. If you think the world as we know it, are a handful of huge financial institutions, the dinosaurs that roamed the earth, then you're right. They are not going to exist without huge infusions of government money. On the other hand if what you really believe is that our economy and our world is 115 million American households you start to see it very differently. And you say, you know if the dinosaurs are gone there are still a lot of stuff to be done."

I get the feeling you are a classic saver with more fiscal acuity/ability than that of the average American family

Saving is more of a decision than any fiscal acuity/ability. One just chooses to bank X% and live within one's means on the remainder.

Elizabeth Warren said savers were a dying breed?

Well, she took about an hour to say as much, but yeah -- in essence. The death of savings and mounting consumer debt are two key components of the vastly diminishing middle class. Check it out:

http://www.youtube.com/watch?v=akVL7QY0S8A

It's long, but it's worth it.

Saving is more of a decision than any fiscal acuity/ability. One just chooses to bank X% and live within one’s means on the remainder.

Yes, but it's a decision largely precluded by our collective mindset as a debtor nation. Saving, investing, discretionary spending, living within or even beneath ones means and not being swayed by popular opinion...it sounds crazy, but I think it takes some real mettle.