General Discussion

NickB79

(20,294 posts)

3. It was fake wealth to begin with

Mon Jun 11, 2012, 03:44 PM

Jun 2012

Seriously, this report bases the 40% drop in wealth figure primarily on the decline in home values at their peak. However, the run-up in home prices from 2000-2007 was a bubble, and not a good representation of true wealth. It was fake money, only supported by a fake housing boom that turned out to be akin to a Ponzi scheme that millions of Americans got sucked into.

For example, the median household's wealth went from $106K in 2001 to $107K in 2004, but then jumped to $126K by 2007 before plunging to $77K in 2010. It is disingenuous to simply take the 2007 numbers and compare them to the 2010 numbers, because the 2007 numbers are clearly not representative of the true wealth of the family.

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Brutal Recession Destroyed Americans' Wealth, Net Worth Down 40% In 3 Years (Forbes) [View all] jannyk Jun 2012 OP

and the top 1% sucked it all up. n/t Horse with no Name Jun 2012 #1

Agreed bobobjohnae Jun 2012 #2

How, exactly? Most of this is due to the house price bubble deflating. Nye Bevan Jun 2012 #5

The one percent received a nice bail out on their failed investments. HuckleB Jun 2012 #6

By having the federal reserve buy their fecal mortgage backed securities at face value! kenny blankenship Jun 2012 #15

Kenny, this is one of the most righteous coalition_unwilling Jun 2012 #17

agreed. laundry_queen Jun 2012 #22

So how did Lehman Brothers go bankrupt? Nye Bevan Jun 2012 #20

Because it happened too fast laundry_queen Jun 2012 #23

Lehman bankruptcy happend before the cash-for-trash programs began. The coalition_unwilling Jun 2012 #24

here's one theory: HiPointDem Jun 2012 #32

Indeed a GREAT explanation........ socialist_n_TN Jun 2012 #26

Thanks for so eloquently proving my 1 line reply Horse with no Name Jun 2012 #27

+1. HiPointDem Jun 2012 #29

kenny blankenship speaks the truth. Prometheus Bound Jun 2012 #37

It was fake wealth to begin with NickB79 Jun 2012 #3

just compare 2001 ($106K) to $77K in 2011 - Huge drop with NO housing factor nt msongs Jun 2012 #4

zing! cthulu2016 Jun 2012 #8

Very true. I'm not arguing that there wasn't a big drop NickB79 Jun 2012 #9

Only if you think housing wasn't already in a bubble in 2001. boppers Jun 2012 #35

A bank lending against that fake value would have disagreed cthulu2016 Jun 2012 #7

All very good points. NickB79 Jun 2012 #10

Wages are not wealth, or worth. boppers Jun 2012 #31

The only the thing fake about it is that it was built on Ponzi bank credit. girl gone mad Jun 2012 #11

I have a different take on it NickB79 Jun 2012 #12

Any time you hear about "overpopulation" remember one thing Zalatix Jun 2012 #13

Who's talking about controlling overpopulation? NickB79 Jun 2012 #14

In 2009, world total fertility rate was 2.47 births per woman. It's likely lower today (recession/ HiPointDem Jun 2012 #34

Speculation drove these bubbles in commodities. girl gone mad Jun 2012 #16

"Economic growth does not have to come at the expense of the environment" The2ndWheel Jun 2012 #18

Speculation can only do so much NickB79 Jun 2012 #25

"You can't speculate and drive the price of a commodity through the roof that's widely available" girl gone mad Jun 2012 #28

I suggest investing in Tulips. boppers Jun 2012 #33

Sure looks like the predicted 'bumpy plauteau' to me n/t Strelnikov_ Jun 2012 #21

no, what you saw was the result of too much money chasing too few real investment opportunities = HiPointDem Jun 2012 #30

"Mission accomplished!" bighughdiehl Jun 2012 #19

Since 2001, every decile of the income distribution lost wealth except the top 10%. HiPointDem Jun 2012 #36