Secular Café: The economic pain of the US middle class

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The economic pain of the US middle class Jun 14th 2012, 11:54 http://edition.cnn.com/2012/06/13/op...html?hpt=us_c2 Quote: Between 2007 to 2010, the typical family had lost nearly 40% of their wealth. And, despite that our economy was 15% larger in 2010 than in 2001, the typical family's wealth decreased by 27.1% since 2001. On top of that, income had fallen. Median family income in 2010 was down by 7.7% from its 2007 level and 6.3% from its level a decade ago... ...The Fed's survey is picking up on the huge effect of the collapse of the housing bubble. For many middle class families, their home is by far their largest financial asset. For decades, people were encouraged to believe that it was the safest way to save for retirement or other purposes. This clearly was not true when house prices became inflated. In the years when the bubble reached levels that were clearly unsustainable, from 2002 to 2007, housing was just about the worst possible place to keep wealth. Unfortunately, tens of millions of Americans listened to experts such as former Federal Reserve Chairman Alan Greenspan, who assured the country that there was no housing bubble. According to reports, Greenspan has a very nice pension and a job that pays more than $1 million a year. He certainly doesn't have to worry like the typical American family. It is difficult to read through the Fed survey and not get angry at the wreckage from a completely preventable disaster... ...Another important takeaway is that older Americans are extremely ill-prepared for retirement. The median wealth for families between the ages of 55 to 64 is $179,400. For families between the ages of 45 to 54, it is just $117,900. This is everything they own -- all their savings, retirement accounts and the equity they have in their home. The typical retiree in the next two decades will be almost entirely dependent on his or her Social Security check. By detailing the economic slide of the average American, the Fed survey highlights a problem that is becoming increasing clear: growing inequality in our country. While most people are hurting badly, the very rich -- whose wealth and income have grown disproportionately big in recent times -- have largely recovered from the downturn. Americans should not tolerate a society where the rules are rigged to redistribute income upward. Otherwise, expect to become poorer. Remarkably, in Washington, all the important people think the most pressing matter is finding ways to cut Social Security and Medicare.

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