Monday, August 25, 2008
the big squeeze
barry ritholtz reiterates today the disparity between econometrics and sentiment data. one need look no further than moyers' 15-minute documentary to see what the middle-class reality increasingly is and how it's driving sentiment. real wages have been falling for a decade; savings have fallen to nil and consumer debt has been skyrocketing for twenty years (as evidenced in this excellent reading via seeking alpha); and real asset prices are falling hard.
i think people are parading around like there might be a middle class, but i think they're so in debt that... that i don't think that really exists anymore. one paycheck and they'd be out there on the street.
this is more than the repo of luxury, though it is also that -- this is the return of hardship. it is probably the last thing on their minds in these times, but if these poor people cannot see how the policies of not only the bush administration but the political dynamic put in place since reagan and thatcher has precipitated their condition, then god help them. republican-voting middle-class suburbanites in colorado have been supporters, unwitting or no, of the development of the predator state. it is no exoneration of the democrats, of course, to say as much. they are reaping what they -- probably quite obliviously and stupidly, in a cloud of ideology and rhetoric -- have sown, and they need help. they need change.
UPDATE: more on middle class decline in this aged posting by yves smith.