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Wealth Recovery? Not Even Close.

Written by Gary North on May 31, 2013

A new report by the Federal Reserve Bank of St. Louis reveals that the wealth recovery since the bottom of the recession has been 45%. It also reveals that most of this recovery has been in the stock market.

It does not mention the fact that about 20% of stock market investors own 80% of the shares.

Then what about the rest of Americans, who lost about 40% of their wealth due to falling home prices? They have not participated in the wealth recovery.

The report does show that the biggest losers by far were Afro-American and Hispanic families with poor educations. They bought homes. They have been hammered by the fall in housing prices.

The report fails to mention that the government forced lenders to lend in so-called red-lined neighborhoods: low-income, low-education, racially profiled areas. So, the lenders followed orders. The low-income people lined up to get subprime loans.

Had these people rented, they would not have lost their wealth. But they were sucked in by promises of attaining the American dream: home ownership. They were offered subsidies from the government to become eligible. Result: “Surprise! You lose! Now you can start over, with ruined credit!” This has been the inevitable and predicted outcome — predicted by Austrian School economists — of that ever-popular promise, “I’m from the government, and I’m here to help you.”

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12 thoughts on “Wealth Recovery? Not Even Close.

  1. We have a government that has gone all bass akwards. They force lending institutions to make loans to people that cannot afford to repay. Then when the borrowers do not pay and things collapse, the government comes in and saves the lending institutions and takes credit for being a hero. Then people blame the banks for doing this to people.
    It wasn't but a few months ago Obama wanted the banks to do the same thing that caused all the financial trouble in the first place. Knowing it was a bad move, now why do you think he would want a replay of a financial collapse? So he could come in being a hero and lay blame on lenders for the mess that he caused,,again. Yup, those mean banks and I am here to help you. Don't be fooled folks, the destruction is by design.

  2. Guess who rigged the banking and tax systems? Corporations and their lobbyists. Regular people had nothing to do with it.

  3. Are politicians "regular people".

  4. Left out of the equation is the mortgage-backed securities fraud that Wall St., the large banks and lenders pulled off with nary an indictment from either the Bush or Obama DOJ. These toxic mortgages were bundled and re-sold multiple times (that alone is felony securities fraud) as AAA-rated "safe" investments. They were then purchased by pension fund managers who relied on those bogus Moody's and S&P ratings.

    When the bubble burst in Sept. 2008, it was not just the sub-prime mortgagees who were left with nothing; it was the American middle class who had played by the rules, didn't lie on their loan applications, worked and participated in the economy all their lives who got shafted too.

  5. 1American1st says:

    Actually, it was the Democrats that passed banking laws to force banks to give loans to unqualified buyers & Barney Frank was at the top of the heap. God I'm glad that squatty little POS is gone! Now we're having to deal with another one – the Obomb.

  6. trailblazer1 says:

    “Corporation lobbyists” is deceptively only a minor part of the picture. The crucial part, but typically ignored in these comments, is the government and the people who make the rules and regulations, and get away with picking winners and losers — thus we have “lobbyists.”

  7. If by corporations you mean those at Jekyll island then you would be correct though it was more bankers there. Read the Creature from said Island for reference. You are correct it was not regular people but the .001%.

  8. You cant recover lost wealth especially if you were a little older when the market ceashed.

  9. I hope the many 'blessings' of multiculturalism, diversity and vibrancy help to salve the financial woundings of Wilber and Wilma – don't rock the boat – Milquetoast. They only wanted to be perceived as 'nice' people after all. Lend a helping hand without having to actually press any flesh. Poor dears.

  10. Don't forget all the jobless young people in the OWS marches getting repelled with water cannons and pepper spray by the authorities, who are always praised for their "restraint".

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