Just one question about down payments, but could we be detecting a little generational difference here. It seems that the younger, earlier in career, first time or receint buyers are all in disbelief that so many people are sitting on huge down payments and wondering where the hell it is coming from. The older, higher paid, move up/industry people here seem to have a “‘wink’,’wink’ trust me people have more money than YOU!” attitude where everyone is sitting on piles of cash with nothing to do.

I fall with my age group (younger) but am learning that there is something that maybe I dont know just yet. I dont understand where it is all coming from when savings rates are negative, inflation is higher than growth in wages, jobs are disappearing, and bankruptcies are up 42% in a year. Sure some people inherit it, some people win the lotto, and some people get in on the next google as the 5th employee. But that is no different than the past, and it just doesnt seem to be enough people at any one time to move the market.

I do have one idea though. 401k. I have been reading these sob stories on cnn about “America’s Money” and trying to figure out what is actually going on. Now it seems most people in trouble have virtually no savings, but I already knew that. It also seems that alot of them were kinda living on the edge, searching for a higher standard of living or better investment returns than prudence suggests. Nothing out of the ordinary there, that is what recessions do, punish bad investment and excessive risk taking. But previously retirments were pensions, and were tied up until retirment. Now they are 401k’s or the ilk and individually mannaged. I noticed a number of people talking about how they liquidated the retirment accounts to pay for todays bills. I have a feeling that a significant % (not a majority)of the downs were are seeing in todays market are along the same lines.

Doesnt this scare anyone else? Does anyone else see this? Am I just nuts thinking that this is a huge fiasco waiting to burn us? It isnt like SS is gonna be taking care of everyone. The best part of the 401k is the YEARS of compounding interest. If 35 year olds are liquidating to survive today, or buy a house, it is like they are starting at 22 (or 18) all over again, but they will be needing the money in 20-25 years instead of 35-40.