STOCK MARKET WATCH -- Tuesday, 4 September 2012

[Demeter]

25. Why You’re a Lot Poorer Than You Thought You Were By Mike Whitney

http://www.informationclearinghouse.info/article32330.htm

According to a report by Sentier Research “real median annual household income… has fallen by 4.8 percent since the ‘economic recovery’ began in June 2009.” That’s worse than the 2.6 percent decline that took place during the recession itself. (between July 2007 to June 2009) All told–from the beginning of the slump in 2007 until today–median household income has dropped an eyewatering 7.2 percent. (“Changes in Household Income During the Economic Recovery: June 2009 to June 2012″, Sentier Research)...The Sentier Research report comes on the heels of a similar report from the Fed which was released in June showing that middle class families saw a nearly 40 percent decline in their net worth between the years 2007 to 2010. The Fed’s 80-page tri-annual Survey of Consumer Finances, points to the Great Recession as the putative cause of the overall decline in wealth, but the Fed’s lopsided policies could be as easily blamed. Low interest rates, lax lending standards and outright fraud generated asset-price bubbles that wiped out 2 decades of economic gains for working people in the US.

The Fed’s survey found that the median net worth of families in the US fell by 38.9 percent between 2007 and 2010, from $126,400 to $77,300. Also, the median value of a US home dropped by 42 percent, from $95,300 to $55,000 in the same period. Plunging housing prices have increased the burden of mortgage debt leaving more than 20 percent of all homeowners with negative equity which greatly increases the probability of default.

Is it any wonder why consumer confidence is at its lowest point since November 2011? Or why mom and pop investors are still fleeing the stock market in record numbers 4 years after Lehman Brothers failed? Or why the yields on 10-year Treasuries are still hovering below 2 percent? Or why bank deposits now vastly exceed loans?

All of these are signs of extreme distress, which is why working people have grown so gloomy about the future. Did you know that (According to the Pew Research Center) 61 percent of all Americans were “middle income” back in 1971, while, today, the number has been shaved to 51 percent? That explains why 85 percent of the people surveyed said “that it is harder to maintain a middle class standard of living today compared with 10 years ago.” The majority of the people also admitted that they’ve had to reduce their spending in the past year. What all of these reports indicate is that the US middle class is being drawn-and-quartered by economic policies which serve to enrich the few at the cost of the many...