RIP Middle Class: Americans’ Wealth Plummeted 40% from 2007 to 2010
Wall Street’s fraud based crash has really taken its toll. From Washington Post:
The recent recession wiped out nearly two decades of Americans’ wealth, according to government data released Monday, with middle-class families bearing the brunt of the decline.
The Federal Reserve said the median net worth of families plunged by 39 percent in just three years, from $126,400 in 2007 to $77,300 in 2010. That puts Americans roughly on par with where they were in 1992.
But don’t call it class warfare.
The recession caused the greatest upheaval among the middle class. Only roughly half of middle-class Americans remained on the same economic rung during the downturn, the Fed found. Their median net worth — the value of assets such as homes, automobiles and stocks minus any debt — suffered the biggest drops. By contrast, the wealthiest families’ median net worth rose slightly.
The drops are truly staggering both for income and net worth:
The mean is the arithmetic average while the median is the numeric value separating the higher half of a sample from the lower half.
While the rich have gotten richer the poor have gotten poorer and the middle class has been annihilated. But more to the point – how has the middle class died and the rich gained wealth the last three years? Simple. The Government Gave Them Money.
That’s right kids. For all their self-starter let the market do as it may rhetoric, when push came to shove the plutocrats took the bailouts. Did I say took bailouts? I meant extorted the bailouts through terrorism – it was a crisis, it was an emergency, and the classic Bernanke line “we might not have an economy on Monday.” Spooky language. Things get serious when rich people get in trouble now however it is just the 99% who are in trouble – no reason to panic.
But TARP is perhaps the most obvious betrayal of stated principles in the history of Neoliberalism; a total market failure (that’s not supposed to happen), rewarding the violation of property rights (fraud in mortgage securities market), and the use of taxpayer money to pick economic winners (cronyism). The Neoliberal experiment failed and all the happy love letters written by the established powers to free market capitalism and all the snooty justifications those same powers made to the poor as to why they should be in charge were comprehensively invalidated. The ideology was obliterated. But what remained was the 1%’s will to power, so damn the rules and take all you can get.
It started with TARP but it wouldn’t end there because this wasn’t about stabilizing markets this was about a group retaining its power. Because they own the country and no eventuality was tolerable that did not leave them in the dominant position. That is why bailouts stopped once the 1% were secure, the “emergency” was over because the owners were back in control and impoverishing the rest of the country was acceptable. For some impoverishing the 99% may have even been preferable. One wonders the deals the bailed out plutocrats are getting right now on formerly middle class assets – assets lost in a crisis the plutocrats on Wall Street created. What a country.
So now its on to breaking unions to drive down wages and privatize government services because then the only way to survive will be to borrow money as Neo-Feudalism takes hold with the rich living off their rents and their puppets in both parties watching the store in D.C. It is truly the dawn of a new era.