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Strategies & Market Trends : The Residential Real Estate Post-Crash Index-Moderated -- Ignore unavailable to you. Want to Upgrade?

To: Jim McMannis who wrote (28362)	7/8/2011 8:39:21 PM
From: John Vosilla	1 Recommendation Read Replies (1) \| Respond to of 119362

'Most middle-class families didn't have much wealth to begin with — about $100,000. For the 22 million families right in the middle of the income distribution (those making between $39,000 and $62,000 before taxes), about 90% of their assets was in the house. Now half of their wealth is gone and it will never come back as long as they live. Of course, rich folk lost lots of wealth during the panic as well. Their wealth is mostly in paper not bricks — stocks, bonds, mutual funds, life insurance. The market value of those assets fell further than home prices did during the crash, but they've mostly recovered their value now. The S&P 500 (^GSPC - News) lost 56% of its value when it crashed, but it's doubled since then. Stocks are down about 13% from peak. The rich recovered; the rest of us didn't. If losing half your meager life savings weren't bad enough, the middle class has also been falling behind in terms of income for decades. Families in the middle make most of their money the old-fashioned way: Working their fingers to the bone for 40 years for wages and a modest pension. The housing bubble was the last chance most middle-class families saw for grasping the brass ring. Working hard didn't pay off. Investing in the stock market was a sucker's bet. But the housing bubble allowed middle-class families to dream again and more importantly to keep spending as if they were getting a big fat raise every year. I don't think we've quite grasped how much the bubble distorted the economy in the Oughts, and how much it continues to distort it today. We're still paying the bills from that binge. During the last expansion from 2003 to 2007, according to an analysis by Fed economists, American homeowners took $2.3 trillion in equity out of their homes through cash-out refinancing and home-equity loans, and they spent about $1.3 trillion of it on cars, boats, vacations, flat-screen televisions and shoes for the kids. It was all a scam, the casino is rigged and time to move on. Forget what happened. Control more cash flowing RE assets and businesses like the smart people do in down times cause your crappy job ain't gonna make you financially independent nor will any kind of speculation or gambling that doesn't have a long term cash flow component to support valuations. The ironic thing is that is the way it always was before the stupid housing bubble for the working class aspiring for more... Obama, the tea party, gold nor the ghost of TH's hourly 'calls' will save you over the horizon<g>