If you’re old enough, the image of the 50s and 60s pop singer Chubby Checker encouraging dancers to scurry under the limbo stick is a picture that stuck in the mind, with Chubby singing the lyrics “How low can you go?*” When I think of the housing debacle that has gripped this nation since 2006, that is the image I have. How low will the equity and prices that sellers get for their homes go? How low will we all go?
It seems that with each economic report on the housing market (read housing debacle) new and lower home values emerge. Officially, $6.1 trillion were lost as of February 2009. That figure is much higher now as foreclosures increase. The Occupy movement has focused on the fact that 1 percent of the population in the US owns over 40 percent of that wealth. The remaining 99 percent (most of us) have seen our assets shrinking since the beginning of the Great Recession in 2007.
While the middle class shrinks, and the working class suffers, middle class and working class households take on more debt. Average household debt is in the neighborhood of $113,000, which includes mortgages, student loans, credit cards, and auto loans. People also have been working longer hours since the beginning of the fall in wages with the actual beginning of economic malaise dating back to 1975. While wages have increased by 23 percent since 1975, people have worked an average of 26 percent longer each week. And, those increased dollars in the pockets of workers have been subjected to the strong, buffeting winds of inflation and the loss of home equity, the latter being the number one way in which working class and middle class folks have attempted to gain a steady foothold in an economy that has morphed beyond comprehension under globalization and the resulting massive loss of jobs in the US economy.
Given all of the above, the appearance of “A Lasting Shadow: Three Years After His Arrest, Bernie Madoff Still Haunts His Victims, His Family and Himself,” (The New York Times, December 11,2011) is an interesting read when compared to the earlier facts presented here. The article is essentially an account of who may win and lose of those among Madoff’s investors (both direct and indirect investors are treated in the piece). So far, about $11 billion out of the $18 billion that vanished in Madoff’s Ponzi scheme has been recovered. Madoff promised extravagant returns on his nonexistent investment ventures, and big and small people were drawn into this great investment fable of our era, most of whom wanted to cash in on the ethos of greed that is so endemic to this economic system.
What struck this writer, however, was not the level of greed that most of Madoff’s investors rose to, but rather the fact that they now wanted something in return for their illusory investment bets. When looked at objectively, the $7 billion difference in what was invested and what will be actually lost pales in comparison to what ordinary folks have lost and will lose by simply buying and maintaining a home. If my math is correct, then Madoff’s theft of investors’ funds is small potatoes compared to the trillions of dollars that ordinary citizens have lost in the equity of their homes! Indeed, some of his jilted investors have argued that they want a return on their investments equal to what they would have received if their final accounting “receipts” from Madoff were in fact not a sham and fiction. It seems that Madoff’s “victims” were “too big to fail!” Talk about chutzpah!
Meanwhile, those of us who bought homes and made payments and expected that those homes would maintain their steady rise in value (or even keep their value from the time of purchase), as had been the case since World War II, were in for the rudest of awakenings. George W. Bush and his Fed chief, Alan Greenspan, created the conditions for millions upon millions of unqualified buyers to enter the housing market, thereby driving up home prices in a so-called housing bubble, only to come crashing down like some modern Icarus. Unemployment did the rest!
Now, with a president who is not willing to assist the mass of those who have lost those trillions of housing equity dollars, there will be no Madoff-like trustees waiting in the wings to assist average homeowners!
Howard Lisnoff is a freelance writer. He blogs at howielisnoff.wordpress.com. *Lyrics from the “Limbo Rock.”
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Who’s worthy of rescue?
Posted on December 14, 2011 by Howard Lisnoff
If you’re old enough, the image of the 50s and 60s pop singer Chubby Checker encouraging dancers to scurry under the limbo stick is a picture that stuck in the mind, with Chubby singing the lyrics “How low can you go?*” When I think of the housing debacle that has gripped this nation since 2006, that is the image I have. How low will the equity and prices that sellers get for their homes go? How low will we all go?
It seems that with each economic report on the housing market (read housing debacle) new and lower home values emerge. Officially, $6.1 trillion were lost as of February 2009. That figure is much higher now as foreclosures increase. The Occupy movement has focused on the fact that 1 percent of the population in the US owns over 40 percent of that wealth. The remaining 99 percent (most of us) have seen our assets shrinking since the beginning of the Great Recession in 2007.
While the middle class shrinks, and the working class suffers, middle class and working class households take on more debt. Average household debt is in the neighborhood of $113,000, which includes mortgages, student loans, credit cards, and auto loans. People also have been working longer hours since the beginning of the fall in wages with the actual beginning of economic malaise dating back to 1975. While wages have increased by 23 percent since 1975, people have worked an average of 26 percent longer each week. And, those increased dollars in the pockets of workers have been subjected to the strong, buffeting winds of inflation and the loss of home equity, the latter being the number one way in which working class and middle class folks have attempted to gain a steady foothold in an economy that has morphed beyond comprehension under globalization and the resulting massive loss of jobs in the US economy.
Given all of the above, the appearance of “A Lasting Shadow: Three Years After His Arrest, Bernie Madoff Still Haunts His Victims, His Family and Himself,” (The New York Times, December 11,2011) is an interesting read when compared to the earlier facts presented here. The article is essentially an account of who may win and lose of those among Madoff’s investors (both direct and indirect investors are treated in the piece). So far, about $11 billion out of the $18 billion that vanished in Madoff’s Ponzi scheme has been recovered. Madoff promised extravagant returns on his nonexistent investment ventures, and big and small people were drawn into this great investment fable of our era, most of whom wanted to cash in on the ethos of greed that is so endemic to this economic system.
What struck this writer, however, was not the level of greed that most of Madoff’s investors rose to, but rather the fact that they now wanted something in return for their illusory investment bets. When looked at objectively, the $7 billion difference in what was invested and what will be actually lost pales in comparison to what ordinary folks have lost and will lose by simply buying and maintaining a home. If my math is correct, then Madoff’s theft of investors’ funds is small potatoes compared to the trillions of dollars that ordinary citizens have lost in the equity of their homes! Indeed, some of his jilted investors have argued that they want a return on their investments equal to what they would have received if their final accounting “receipts” from Madoff were in fact not a sham and fiction. It seems that Madoff’s “victims” were “too big to fail!” Talk about chutzpah!
Meanwhile, those of us who bought homes and made payments and expected that those homes would maintain their steady rise in value (or even keep their value from the time of purchase), as had been the case since World War II, were in for the rudest of awakenings. George W. Bush and his Fed chief, Alan Greenspan, created the conditions for millions upon millions of unqualified buyers to enter the housing market, thereby driving up home prices in a so-called housing bubble, only to come crashing down like some modern Icarus. Unemployment did the rest!
Now, with a president who is not willing to assist the mass of those who have lost those trillions of housing equity dollars, there will be no Madoff-like trustees waiting in the wings to assist average homeowners!
Howard Lisnoff is a freelance writer. He blogs at howielisnoff.wordpress.com. *Lyrics from the “Limbo Rock.”