Here is an exert from an article regarding the current economic crisis.

Any thoughts?


The bursting of the housing bubble caused the current crisis, but the underlying problem began much earlier -- in the late 1970s, when median U.S. incomes began to stall. Because wages got hit then by the double-whammy of global competition and new technologies, the typical American family was able to maintain its living standard only if women went into the workforce in larger numbers, and later, only if everyone worked longer hours.

When even these coping mechanisms were exhausted, families went into debt -- a strategy that was viable as long as home values continued to rise. But when the housing bubble burst, families were no longer able to easily refinance and take out home-equity loans. The result: Americans no longer have the money to keep consuming. When you consider that consumers make up 70 percent of the economy, the magnitude of the problem becomes apparent.

What happened to the money? According to researchers Thomas Piketty and Emmanuel Saez, since the late 1970s, a greater and greater share of national income has gone to people at the top of the earnings ladder. As late as 1976, the richest 1 percent of the country took home about 9 percent of the total national income. By 2006, they were pocketing more than 20 percent. But the rich don't spend as much of their income as the middle class and the poor do -- after all, being rich means that you already have most of what you need. That's why the concentration of income at the top can lead to a big shortfall in overall demand and send the economy into a tailspin. (It's not coincidental that 1928 was the last time that the top 1 percent took home more than 20 percent of the nation's income.)

Full article at:
http://www.washingtonpost.com/wp-dyn/content/article/2009/01/30/AR2009013003116.html

Verrrrry interesting.

HEY LETS TREAT THEM LIKE LOTTERY WINNERS.........

Being rich in thoughts and insight, it appears I'll have to subsidize this topic to keep it afloat.

My thoughts/input, as per requested are the following:

"But the rich don't spend as much of their income as the middle class and the poor do -- after all, being rich means that you already have most of what you need". I'm trying to think of what the rich have in regards to "needs" that I don't have (not being "rich"). Food, check. Clothing, check. Shelter, check. Everything else would be a "want". Class envy rearing it's ugly head again.

While the top 1% reap 20% they also PAY double that percentage in Federal taxes.

"The top 5 percent (those making more than $153,542 -- the group whose taxes Obama seeks to raise) pay 60 percent of all federal income taxes. The rich (aka the top 1 percent of income earners, those making more than $388,806 a year), according to the IRS, pay 40 percent of all federal income taxes. The top 1 percent's taxes comprise 17 percent of the federal government's revenue from all sources, including corporate taxes, excise taxes, social insurance and retirement receipts".

"Thirty percent of American voters pay nothing -- zero, zip, nada -- in federal income taxes".

http://townhall.com/Columnists/LarryElder/2008/10/09/in_defense_of_the_rich?page=full

ARE YOU JOE THE PLUMBER????????????

Anyone that wealthy is not sitting on a nest-egg in a savings account in his local bank an hoarding it away. The people on top invest to make more money. They buy stocks, invest in mutual funds, buy real estate and rent to businesses and residential tenants. They may not buy goods on the local scale but their investments fund the businesses that employ and supply the rest of us.

And, as pointed out, they also pay the vast majority of income taxes. We need them to be rich because once they hit the top bracket, they pay more. look at it this way: one person making $1M will pay more income tax than 2 making $500k each. the more people spreading that money around, the less income the government gets.

SO WHY IS THIS COUNTRY BROKE?????????????

The answer is simple. You have a fiat currency backed by nothing. You have irresponsible people who are spending more money than they have. Politicians and individual citizens alike with a sense of entitlement. You have a segment of society that does not produce or contribute and are subsidized. You have a system that rewards incompetence and irresponsibility, whislt punishing those who succeed. Easy credit provided to people who don't have the ways or means to pay it off. Unfair "free" trade polices. Lastly, forgetting basic economics and what made this country prosperous... opting for the path of least resistance.

MORE RESPONSIBLITY AND LESS FORIEGN TRADE WILL GETS OUT OF THIS MESS........????????

Nicely summed up.

Imagine that!

More PERSONAL responsibility and less UNFAIR foreign trade would be good I believe. Learning the difference between a "want" and a "need" would be my first choice though.

I suppose one must first believe this country is in a mess to begin with. Looking at it from my own personal perspective, I'd say things have never been better. Years of hard work, education, and fiscal conservative values are now paying off. All my basic needs are satiated and it's mere semantics in terms of "wants" now. An analgonous comparision, Bill Gates vs me. He has a house, I have a house. He has food, I have food. He wears clothes, I wear clothes. In terms of "needs", Bill Gates doesn't have anything I don't. He may have a giant plasma tv with the screen size of a movie theater and I may have a little 6" black and white- we still see the same basic images. If I WANT the same kind of tv as Bill Gates, there are only four legal ways I know of to obtain one. Work to earn money and save it to buy one, learn how to build one and build it myself, wait for someone to give me one, or have the government make giant plasma tv's an entitlement.

Methinks thou hast merely scratched the surface.

TO MUCH FORIEGN AID..........

ding, ding, ding. give this man a prize!

We've needed to move from a credit-based economy back to a cash economy (at least) for a while now. Even though it's still not backed by anything, credit is still a step worse. This will force many to start living within their means a bit more. Credit is going to be reserved for the responsible for a while to come.


and as for why the government is broke... same reason. the gov has a large spending problem.

Well, we must share the loot, don't we?

Or should we just print and expect everyone to only import our inflation, and no seigniorage?

why is the country broke. well for one. bush spent billions of dollars in iraq. wasting most of our money. thanks bush. loser.

The companies that went overseas.

no bush started a illegal war in Iraq. then lied to cover up his reason why. then sold our rights to big business. i wonder does George w bush, no how much a human life is worth.

FORIEGN AID TO A COUNTRY NOT WORTH IT.............