Thursday, March 12, 2009

Almost $13 Trillion in Net Worth Lost

From the NY Times website:

Net Worth of Families Down Sharply

Family net worth had hit an all-time high of $64.36 trillion in the April-June quarter of 2007 but has fallen in every quarter since that time.

The record 9 percent drop in the fourth quarter pushed total net worth down to $51.48 trillion, a level that is 20 percent below the third quarter 2007 peak.

Wow. If you estimate the population of the US at around 305 million, it's a drop from about $211,000 per person to $169,000 per person, a drop of $42,000 each. I can't say I'm proud of having done more than my share of the losing!


Anonymous said...

and this doesn't take into account the post obama inaugural plunge which the mainstream media seems to not be apt to mention.

hopefully this latest rally runs for a while.

Slinky said...

Wow! I guess you'll have to add a little more to your per person loss, because I've been busy increasing my net worth. :)

Anonymous said...

anon 6:34, I call bullsh1t. The stock market plunge has consistently been front and center on the mainstream news. And while the conservative news likes to refer to the economic crisis as "the Obama recession", (just as you apparently like to use the term "obama inaugural plunge"), the fact is that the dominoes for this crisis were being set up long before the election even happened.

Anonymous said...

Take those numbers down another 20% or so given the report is for the 4th qtr. With the stock markets off another 20% or so and house prices continuing to decline the numbers have gotten only worse!

By the way, for calculating purposes, I believe there are approximately 111. 5 million households in the US.

Anonymous said...

9:25----you sound like a sycophant. I voted for Obama. The fact remains that the market has plunged since he took office. Face reality and take te Obama signs out of your window.

Lets hope this rally is sustained.

Never trust anyone who calls themself a Democrat or a Republican. Invariably, the have deep self esteem issues and identify with some political figure or dogma which has little if any effect on their own lives.

Learn to think for yoursef instead of what MSNBC or FoxNews tells you to think.

clear_water said...

Just prior to Obama's election, the economists who correctly predicted our current crisis (Krugman, Roubini, et al.) long before the mainstream media - or the rest of us - realized what we'd landed in, also predicted the markets, the GDP, etc., were all going to get worse before they got better. What we've seen in the last month and a half confirms their prognoses. To lay it at the feet of any one politician is simply silly; and to expect the horrendous economic problems that have developed over the past several years - escalating ever faster in the past two - to have been resolved in less than two months is beyond simple.

That being said, I think we all should take note of several things:

Prior to this crisis there was an extremely large - and rapidly growing - income disparity between the very rich and the rest of us; to a degree not seen since the Roaring Twenties (which, of course, preceded the last huge crash and the great depression). Our middle class was getting squeezed out, but many of us ignored this b/c we were able to maintain a middle class lifestyle on by going deep into debt - credit and mortgages.

The wealth that was lost lost was largely illusory: house prices were inflated beyond reason, mortgages were re-packaged and sold as "investment" vehicles on a huge, international scale, companies cooked their books and / or lied, cheated and stole to appear far more profitable than they were. The obvious crooks (the Madoffs, Stanfords, Ken Lays / Enrons, etc.) aside there are many companies whose CEOs and top level management should be in prison but will never see jail time (Bear Stears, Lehman Brothers, Merrill Lynch, AIG, WaMu, Golden West...). They operated just this side of legal, but they were ethically bankrupt long before they folded (or nearly did), losing stockholder money and killing our economy.

Anonymous said...

"The wealth that was lost lost was largely illusory: "

say what? Do you own a house/aparment or have you lost a job? There's nothing illusory about what has been lost, bub.

Anonymous said...

Well we had a false economy for the past 8 years or so, so the wealth never really existed, did it? It was just all on paper - and people "feeling" wealthy because their homes were "worth" so much.

Anonymous said...

Anon 3/13/2009 10:08 AM:

You say I "sound like a sycophant" but the fact is I did not say a single pro-Obama statement in my post. I simply pointed out that the economic crisis is NOT his fault. Had McCain won, I would have defended him equally. This crisis has been a long time in the making, and the culprits numerous.

The fact is, I don't particularly have confidence in Obama's leadership regarding resolving this economic mess.

Anon, mainly I was pointing out that your choice of diction was quite charged.

Anonymous said...

"Well we had a false economy for the past 8 years or so"

Actually, 30:1 leverage did not ramp up in earnest up 2003-2004 and ended in 2008 so you do't know wha you are talking about, cool buzz phrases notwithstanding.

This is why the housng market tumbled and why the equities market is oversold, everyone thinks they're a financial wiz.

Anonymous said...

"I simply pointed out that the economic crisis is NOT his fault."

At what point would you begin to blam Obama for anything? Sometime in 2012 I suppose, if ever.

clear_water said...

If you'll notice, Anonymous, when I referred to illusory wealth, I cited inflated home values and unethical business practices... I never said that lost jobs and / or homes were illusions and never implied such - I'm sorry that you so mis-read my remarks.

The lost jobs and homes are results of those home-price inflations and sketchy business practices, which resulted in real, personal and life-altering losses for all of us. Like everyone else, I'm anxious about employment, fear for what (little) savings I have and worry about the future.

Anonymous said...

anon dude (or dude-ess):

not everybody who sees the current economic crisis as a complex multi-faceted long-evolving event is the stupid unable-to-think Obama-worshipping cult member that you seem to think they are... But it has been interesting to hear your wide-sweeping generalizations and stereotypes, so feel free to keep them coming.

Anonymous said...

I think this is a reactionary article, frankly I'm surprised people are so quick to knee-jerk to such hype.

Look: Net worth was high because housing prices were inflated. That's like saying that if suddenly $1 was worth $100, that our net worth was up 10000%. Then, when the economy went back to sanity, and $1 was worth $1, that our net worth dropped by that much.

Housing prices created artificially high net worth. Now, it's dropping precipitously because people assumed the prices would stay inflated. They bought at those prices, which created high levels of debt. So anyone who's underwater on a house is dragging down the overall net worth of the nation quite a bit more than the rest of us.

Seriously, what's the big deal? Times are very hard. Lots of unfortunate things are happening. So right now, I think net worth statistics are really the last things to try and gauge our country by.

moocifer said...

My neighbor scratched his butt on january 19, 2009 and the stock market has plunged ever since.

Hopefully he will not do so again in the future, as he seems to wield an awesome power over equity prices.

moocifer said...

My family could have bought a large commercial property with the money they lost over the last year in the stock market. I guess we could now call that "illusory commercial property".

Anonymous said...

considering we haven't done anything to address the underlying problem of toxic assets, it is no doubt that we are seeing the markets still fall and gyrate all over the charts. it is also no wonder banks have made money the past two months, because of all the TARP 1 money they received, hoarded, and loaned out at high rates. I'm fine with TARP 1.

once the clock starts for whoever is in office, it becomes their problem regardless. real leaders don't waste useless energy and focus whining about whose problem it is or blaming their predecessor, they focus on fixing the problem and moving on.

Again, we don't have a toxic asset plan yet, and we are spending to high hell on stuff that doesn't fix resolve the toxic asset mess. This means since we are already negative, we go doubly negative spending on other things, and then we go triply negative when we finally get around to buying up the toxic assets.

Anonymous said...

Here is a good, relevant post copied from thehousingbubbleblog:

"At some level, this is a case of easy come, easy go. When people ask where the money went, the answer is largely the same place that it came from. All that easy money people made by just sitting there watching their house and 401(k)s go up in value has disappeared. The losses are just as real (or illusary) as the gains were. Of course some got their money out of these instruments before the fall, and some have lost more than their gains, and are losing money that they actually worked for. But the idea that we all become rich just sitting there watching our money grow never DID make any sense."