Friday, June 27, 2014

Americans Still Living Large

Here is an interesting article, it seems Americans didn't learn enough during the "Great Recession".
MSN How the Middle Class is Hobbling Economy

G2A Recession a Bad Thing I
G2A Recession a Bad Thing II

Remember: If you want it, just take out a loan.

Google Zero Equity Mortgage Search


Sean said...

I found the headline on that article fascinating. It ain't the middle class that's hobbling the economy. They're the victims, not the perpetrators.

John said...

Of course I disgree. Many of them take on too much debt, live above their means, default on their obligations, and/or spend their cash/debt to employee foreign workers.

John said...

So Sean, who do you think is hobbling the economy?

Sean said...

We've had this discussion before. The financial crash of 2008 and Great Recession can be primarily (but no exclusively) laid on the greed of the financial service industries, who engaged in risky and unwise practices.

Since then, the financial service industry got its bailout, and the "too big to fail" companies have only gotten bigger.

Meanwhile, the middle class has fallen prey to a Washington political system that is more interested in fighting each other than helping people (see the too-small stimulus package, allowing unemployment benefits to expire despite a dismal job market, efforts to cut back on other safety-net programs). Their wages have stagnated, despite their labor providing continually higher productivity levels for their employers.

The political party that tends to blame people for these problems refuses even basic efforts to try and help people. Witness GOP efforts to subvert the Consumer Finance Protection Bureau, for instance. You want people to be responsible? Well, help them out a little bit. Things like the requirement that credit card contracts and mortgage agreements be written in plain English instead of legal gobbledygook are good ideas. Who has stood against them?

Your original link shows that Americans have started borrowing more again -- for cars and education? Well, what are they supposed to do? How are they going to get to where they need to go without a car, especially again when one side of the political system is steadfastly opposed to investing in transit? How else are people going to pay for higher education, if not loans? The job market for HS graduates is dismal. And nobody in our political system has done anything effective to address this problem.

The failures of the political and corporate classes of this country are being paid for by the middle class.

John said...

I assign the responsibility for the crash differently, since if people had paid their mortgages there would not have been a crash... And if I remember correctly the "bailout" money was paid back, plus a whole lot of fines.

Higher levels of productivity... Do you think employees are doing that or technology?

Legaleze only matters if you do not make your payments... I have signed many many documents that I do not understand and I have never had a problem. I live within my means and make sure I pay the obligations that I have agreed to.

As for loans and living life. Have you seen the houses that are being built in the suburbs... The middle class folks do not need 3000, 4000, or 5000+ sq ft homes... But they do want them and are willing to live on the financial edge to get them.

Folks like yourself want the wealthy and conservative to pay for the bad financial decisions of American citizens. If we do, why would they ever choose to live within their means?

G2A Recssion
G2A Recession Revisited

I really wanted that acreage in Orono with a beautiful home... That is a great dream that I am not willing to live on the financial cliff for. To bad more people find it very difficult to live below their means.

John said...

One more point... Remember that extended unemployment benefits is just another name for welfare.

I mean people are getting tax dollars that no one paid insurance premiums for.

However it is worse than welfare because there are no income or wealth requirements. A multimillionaire can receive them... And you think they are a good thing to continue paying.

How about we save the welfare money for those that truly need it?

Sean said...

The problem with that theory is that it ignores the documented facts that we know financial services companies were issuing loans to people knowing there was high risk of default. Goldman Sachs unloaded millions of dollars of junk mortgage-backed securities on its clients, bet on them to fail and cashed in when they did.

Did some people foolishly over-leverage themselves? Absolutely. But they were aided and abetted by a financial services industry that was running on tilt and should have known better.

Sure, technology impacts productivity. But technology doesn't create itself, it doesn't maintain itself, it's not managed by itself. There's no logic to the disconnect between productivity and income in our society the last 30 years.

I want the people who deserve to pay to pay. Can you honestly say that the damage of the last recession hit equitably? How much value did your home lose? At the nadir of the recession, my home was worth less than what I built it for in 2003. How much value did your stock portfolio lose?

People who were over-leveraged have paid dearly. Middle-class and upper-middle class folks who did the right thing paid dearly. Guess who didn't pay? The corporate, Wall Street, and government elites that caused the problem and bailed themselves out on our dime.

John said...

I agree, everyone was greedy and loving the bubble until it burst. That is my point.

Microsoft and the others improve our productivvity, so we all deserve a raise?

The wealthiest owned a lot of stock and real estate, so they took a huge hit. However since one only loses money if they sell, most of us didn't feel a thing.

John said...

As for bailouts, what about the years of extended unemployment benefits?
Will the citizens who received them pay them back like the banks did?
Or those who received the other temporaary extras?

Sean said...

There's not much evidence, in fact, that the wealthy took a huge hit. Their incomes continue to grow, while the bottom 90% or so have stagnated or declined since 2008.