Friday, June 10, 2011

The greener pasture is an overgrazed dust bowl

The Dow dropped sharply today to close well below 12,000. Retail investors are losing confidence in the markets withdrawing 2.3 billion this week for a total of seven billion in the last six weeks. Retail investors are people who are betting their own money in the market and of course those are a rare breed in America anymore. Your typical American who thinks he is a capitalist has a house with a mortgage and has a 401(k) that somebody else is betting in the market for his own enrichment and not to advantage the sucker (I mean typical American “capitalist“).

The average American does owe less than before with household debt falling by ½ a trillion dollars in the last three years but 60% of that represented defaults and not a paying down of debt. Student loan debt is increasing and will soon pass the trillion dollar mark passing the declining household debt.

The percentage of their homes that Americans actually “own” is near its lowest point since World War II, the Federal Reserve said Thursday. The average homeowner now has 38 percent equity, down from 61 percent a decade ago. Note that would was before the housing bubble really took off, that “gain” has been wiped out and far more.

A quarter of Americans are underwater on their mortgages, it would be more but the millions of foreclosures are taken off the list. Another 8% of mortgages have less than 5% equity and will slip underwater soon as home prices continue to fall bringing to a full third those people who would be better off if they walked away from their home. Not that I’m advising you do that, rent is going up even as two and three family households are becoming more common. Living in a “compound” with extended family is a third world survival technique and you must be aware of where you live.

The bottom 80% of Americans only hold seven percent of the wealth and this number is declining fast. The top 2% hold close to 50% of the wealth and this number is increasing. Increasingly wealth is held by corporations and while you might assume this means stockholders, but you would be wrong. Stockholders own pieces of paper that are only worth what the market says they are worth and 401(k) owners don’t even have that.

Major corporations largely belong to the senior management who come from a close knit club of elites. I say “belong” in the sense that they are largely the only people who benefit from these corporations which provide them a lifestyle that the “let them eat cake” crowd of 18th century France couldn’t even dream of.

If you think you are going to leave this third world blight for greener pastures in some other country, forget it. Unless you have a spouse or from there, some other claim to citizenship or are under forty with a desirable skill they won’t take you unless you have enough money that you could just stay here.

There’s also the likelihood that the misery here will spread as transnational corporations and the rich who own them know no bounds to their greed and no borders will restrict their destructive tendencies.


sailtothailand said...

You are correct about greener pastures not existing. Take for example the country I have called home for 13 years: Thailand that has been ripped apart by the CIA in another of its 'color revolutions' and is on the verge of civil war in advance of the passing of the very ill greatly beloved Monarch. Living in Thailand is still several magnitudes better than DUHmerica but that will soon change as economies worldwide are poisoned by the DUHmerican contagion.

Dave said...

What we're seeing here is the shredding of the social contract. People will only hold back on looking out for only their own interests as long as they believe being civilized is helpful to them.

When individuals or groups believe they are screwed, that they will never have anything, that there is no hope at all, they have a tendency to behave irrationally.

What kind of world will we have when random murder-suicide becomes common? Or vandalism for it's own sake becomes an art-form? Or when government becomes immeasurably brutal and murderous in response to these things?