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Post by Deleted on Jun 14, 2012 19:13:14 GMT
Frankly, I have no personal opinion about this since I left the United States 39 years ago, and we have our own problems where I am living now (basically the same problems, probably). However, my brother sent this to me today and he seemed rather upset by the information (assuming that it is accurate).
The Federal Reserve just released its Survey of Consumer Finances, the only government survey of wealth in America. The Survey is conducted every three years. This survey, conducted in 2010, is the first one to reflect the effects of the Wall Street Meltdown in 2008.
How does it look? Bad. Really, really bad.
The median wealth of American families (meaning half above and half below) dropped from $126,400 in 2007 all the way down to $77,300 in 2010. That's a 39% slide. It puts the median net worth of American families at its lowest level since 1995, fifteen years earlier.
About 12% of American families have a negative net worth. Meaning that they're broke.
Among Americans with no high school diploma (15 percent of the adult population), median wealth plunged from $34,800 in 2007 to $16,100 in 2010, a 54% drop. That is the lowest level since at least the Fed's 1983 survey, maybe earlier. So three decades of progress have been wiped out.
Among minorities, median wealth plunged from $29,700 to $20,400. That is the lowest level since 1992. White median wealth is now 540% higher than minority median wealth.
The median value of American homes dove from $209,500 in 2007 to $170,000 in 2010. But the median mortgage was almost completely unchanged: $74,700 in 2007, $74,100 in 2010. So debt payments increased from 7% of income to 11% of income.
In 2007, the bottom 25% had a net worth of $14,800 or less. In 2010, the bottom 25% had a net worth of $8,300 or less, a 44% decline.
In 2007, the top 10% had a net worth of $955,600 or more. In 2010, the top 10% had a net worth of $952,500, a decline of less than 1%.
Let me sum it up for you: In the greatest economic crisis that the United States has faced since the Great Depression, the rich barely lost a nickel. But the poor definitely got poorer. And people in the middle were crushed.
If this continues any longer, then we can invite a priest to administer last rites to the American Middle Class.
It appears to be a bit demagogic to me, but who knows? Perhaps the situation is even understated. Does anybody who has been following the situation have an opinion about it?
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Post by fumobici on Jun 15, 2012 0:51:39 GMT
Alan Grayson wrote that and he's hardly a fringe figure. The statistics are shocking and pretty much irrefutable, the American middle class is systematically being destroyed so a few thousand already obscenely wealthy families can add a zero or two (or more) to their net worth. There's really nothing remaining to constrain them from finishing it off, as they own both viable political parties that write the laws and the politicians that theoretically should regulate the process and prevent it. The US is barreling towards becoming something akin to a Third World nation.
I don't think there's any realistic way of stopping the looting, the political process is so corrupted. I've lost hope and don't want to live here any more.
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Post by onlymark on Jun 15, 2012 6:28:32 GMT
I wonder who the article is aimed at when he has to explain what "median" means. Or is it that he realises he has to do so as dumbing down most everything is taking effect and lowering the intelligence of the general population.
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Post by Deleted on Jun 15, 2012 11:17:59 GMT
I heard this report on NPR early Wednesday a.m. and was extremely alarmed at the figures being reported. What's so very alarming is the very brief period of time in which this occurred. Staggering. Fumobici is spot on with the grim aspects and ramifications of this. Looking for a 'silver lining',I guess that interests rates being as low as they are may be taken into consideration. I would not want to be a member of the younger generation with this looming in my future.
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LouisXIV
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Post by LouisXIV on Jul 2, 2012 2:58:44 GMT
I am a retired real estate broker and I could see this coming for a number of years. The real estate market was grossly over priced; banks and the government were encouraging nothing down mortgages or even negative equity at the time of purchase. I saw one transaction where the home was financed for 120% of value and the purchaser walked away with money in his pocket. Government loans, like VA and FHA where 100% financing is possible and the buyer gets a special interest and has to pay "points" to get the loan (Points are 1% of the mortgage amount and typically they would cost about 2 points or $4000 in a $200,000 mortgage) The interesting thing is that the seller pays the points, so the price is increased by this amount and then the seller is willing to pay the $4,000 to help the purchaser get a better interest rate. The appraisers also understand this and allow this to happen. So then the lender only has to bring $196,000 for the loan, but the purchaser has a monthly payment based on $200,000. When you consider that the average mortgage only has a life of 5 or 6 years there is no net benefit to the homeowner when you consider it cost him $4000 up front. Also with none of his own money in the home it is very easy for them to walk away from the problem should they encounter a little financial problem. And many have. In the last 5 or 6 years with the decline of real estate market people who wanted to refinance to the new lower interest rate, could not because they owed more on the home than it was worth and had a negative equity situation. I have no problem in supporting our Veterans, but I do have a problem of putting them in a position that has a strong possibility of financial disaster. Also, the cost to administer these VA loans is unbelievable and my experience in dealing with government employees in the VA is that they are grossly incompetent. I think in the long run it would cost less for the government to just give the veteran 10% of the home value to get the mortgage. On the topic of loans, I currently work part time at a title company and for years we had people coming in to refinance their homes to pay of their credit cards. When the home we increasing in value this was not a problem, but when home prices dropped, people found that they had no equity in their home to take out to pay off the credit cardS. I have no sympathy for these people, they should have never have been putting 20, 30 or 40 thousand dollars on their credit cards in the first place. Years ago we had some people come in to refinance their homes a couple times a year to pay off their credit cards. I also think the banks are at fault here, if someone comes in to get a loan and they have any credit card debt they should be denied. Especially these people who are doing this on a regular basis.
I am not surprised by the figures mentioned above; most of Americans net worth is in the value of their homes.
More interesting figures, the average an American saves out of his disposable income in 2005 was one half of a percent (.5%), in 2009 it had increased to 1.2%, why the increase, because in the last few years they got a very painful reality check. Germany is a little over 10% and France is a little over 12%. In general the average American is either ignorant and/or a fool with his money. My source did not state what the rate for Greece was, I bet that would be interesting.
The biggest fool with money in our country is our government. 15 Trillion in debt, an amount so huge the human mind cannot really comprehend it, so naturally we ignore it. Stick you head in the sand and maybe the problem will go away. Or like congress does, just kick the problem down the road. So to keep up the current spending levels we borrow more. And then, like about two years ago, the Feds print about $800 billion dollars of worthless money to "spur the economy", and the net effect is inflation. Why should the countries we buy our energy from give us the oil we need for the same price, our money has been devalued.
So the government gets deeper in debt and borrow money from other countries and its own people in long term bonds with low interest rates that does not even keep up with the inflation. The individual states in this country have a real problem; they don’t have a printing press. We finally got a governor in Wisconsin who grabbed the bull by the horns and did something about it. We need many more governors like that and especially people on the Federal level to do something that will really do something to correct the problem.
Then we have these state run lotteries that are nothing but a tax on fools. Many of the people who buy these lottery tickets really don’t have the money to purchase them. The states are just selling false hope, but politicians are good at that.
Europe does not really look that good either financially. What if Greece does fall, who is next? Where does it stop?
I hear people say all the time when there is some problem, “When is the government going to do something about it?” No, when is the citizen going to do something about it and stop putting blind faith in their government. Read your history, governments are the problem. Yes, we have to have governments, BUT we don’t have to give them control of every aspect of our lives or even expect them to. People have to take control of their own lives.
Benjamin Franklin said, “When the people find that they can vote themselves money, that will herald the end of the republic.” Well politicians find that if they promise things to the people they can get elected and re-elected. Also the people like getting “free stuff”, well it is time to pay for it.
Our current President wants to get people spending again so that people can get back to work. The Americans have just learned a very painful lesson and I doubt they are about to restate their foolish spending habits real soon. But I am sure in another 10 or 15 years they will forget about this and do it all over again.
I also learned this past week that student loan debt has just passed credit card debt and that the average age of those paying off student loans is in the forties.
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Post by fumobici on Jul 2, 2012 13:46:59 GMT
The Benjamin Franklin quote is a misattribution- see www.lorencollins.net/tytler.html If current deficits were in fact deemed unsustainable we see devaluation in the USD and inflation no? Borrowing rates suggest the banks and the Fed don't deem that to be the case. That said the budget could easily be balanced by going to a single payer universal health care system like all civilized countries already do which would save literally hundreds of billions, cutting the obscene American defense/security budget which easily exceeds one trillion dollars a year in a country with no real military threats and of course closing tax loopholes and returning to historically moderate tax rates on the upper income strata.
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LouisXIV
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Post by LouisXIV on Jul 2, 2012 15:55:13 GMT
There may be a misattribution to Franklin, this was my source: jpetrie.myweb.uga.edu/poor_richard.html But it does not matter who says it, the concept is the same. I don't where you live, but I sure see inflation where I live every time to go to the store. If you want to believe what the banks and the Fed say, go right ahead. They are masters of Manipulation . Sorry I just can't beleive that a single payer universal health care system is the answer. I do agree that insurance is also not the answer, is probally the cause of the most of the problem. Is our defense budget to high, yes it is, we have to be prepared. We do not have a real military threat at the moment, but tomorrow, maybe. Our income tax is a joke. The Americans were really coned to accept the 16 ammendment to the constution. Back then they said you would not pay income tax unless you made over about $5000 a year. Well thing have changed a lot since then. Of course it is not fair, but who writes the rules, politicians, lobbyist, big business and those who contribute to campaign funds and bureaucrats. The IRS code is so complicated now one really can figure it out. If you had your income tax prepared by three different prepares, the is a good chance you will get a different result from each and most likely the IRS would accept all three. The income tax is also unbeleivably expensive to administer by the government and by employers. I feel the 16 amendment should be repealed and in place of it a sales tax. And everytime time the Wall Street people sold their stock it was a taxable event. I also feel basic food should not be taxed.
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Post by Deleted on Jul 3, 2012 13:26:13 GMT
Taxes on consumer products create one of the biggest debates in Europe, since it is considered to be a huge penalty on the poor and just a minor inconvenience for the wealthy. When you are wealthy you can keep buying whatever you need, but when you are poor (and not even mentioning food), even buying a new lightbulb or an electric fan in the summer can be a problem.
The attempt is generally to try to tax goods and services as little as possible (except of course for sin taxes -- alcohol & tobacco being the main items) and go instead after the obscene profits of banks and pharmaceutical companies, not to mention capital gains and usurious interest rates.
As for universal health care, it is so obvious that I don't understand how (certain) Americans can be so blind. A healthy population works better, produces more, improves the country's economy and doesn't bankrupt the hospitals, because people are cared for before their health condition gets serious. A private system enriches the insurance companies and creates the huge bureaucracy having to file claims, get treatment approved, battle increasing rates constantly -- and then there is that incredible ping pong game between the insurance companies and the health providers that are always fighting over the billing. When I go to see a GP in France, I know what I am going to pay -- 23€. The government refunds 70% of this, and my mutual insurance, which I am free to have or not, reimburses the rest. If I go to the hospital, 18€ a day is the cost to my mutual insurance. And let's not forget that the countries of Europe spend far less per capita for health care than the United States.
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Post by fumobici on Jul 3, 2012 15:45:24 GMT
I find astonishing that Americans rail on ad nauseum about taxes, yet apparently have no objection to overpaying for health care to the tune of thousands of dollars per year for a typical family as if the money going to private for profit corporations somehow magically doesn't count against their finances as much as less money going to public institutions. It's like they can't understand basic arithmetic, being blinded by ideological stupidity.
I could actually live with a sales/VAT only tax system as long as all the basic necessities of life, food, non-luxury housing and transportation, health care, education etc. were exempted. But of course going that way everything else would have to be massively taxed to compensate. Progressive income taxes are probably far fairer all considered.
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