Yes, folks, this is about middle class Americans, what has happened to them in the past thirty years, and what happens now that the American economy is disintegrating.
The current global recession may be coming to an end for Asia, but it looks like it is just beginning for the United States. Here is further evidence that the engines of recovery in the United States are substantially damaged, and while the rest of the world recovers, the US may be sidelined by systemic problems.
The middle class has been the growth engine of economies around the world since the Middle Ages. They were the foundation of empire for Britain, and have been the driving force behind consumerism in America that has made the US the mightiest economic engine in the world.
This same engine, the rise of a middle class, is now driving the emergent economies of China and India.
Now, at a time of huge economic upheaval in the United States, there are signs that the middle class has severely eroded since 1970, and the US risks devolution into a two-class society: the rich and ultra-rich, and the rest of the society marginally poor, living on the edge.
In any recession, it is the middle class that eventually pulls the economy into recovery. What happens when the middle class is so severely weakened that it is no longer an engine of recovery?
I recently watched a one-hour YouTube presentation by Elizabeth Warren, titled "The coming collapse of the middle class". http://www.youtube.com/watch?v=akVL7QY0S8A&NR=1
Elizabeth Warren is on Time magazine's list of 100 most influential people in the world, a Harvard economics professor who also heads the Congressional Oversight Committee for TARP, and the scourge of the Government players who have been pulling wool over the eyes of the people. She has called Paulson a liar, and the Treasury hate her. Pretty good credentials. :)
She is talking about America's middle class, of course. She does a great analysis of household income and expenditures over the period 1970 to the present day. The inescapable conclusion she reaches is that, in the US, middle class now live a substantially more risky existence than they did in 1970, and the safety nets have already gone.
In 1970, families lived more securely on the single income earned by the husband than today's families do with both parents working. In 1970, families saved more of their income, and if there was a family crisis, there was more leeway. For example, the wife could go out to work to supplement the family income. Today, with both parents working, an explosion in family debt obligations, very little saving, and ruinous health costs, families are far more threatened by minor financial changes.
In this current economic meltdown, these problems are magnified enormously, and affect far larger numbers of people. With asset values falling, and unemployment rising, the American middle class is under siege, and may simply disappear under the waves of change.
If you are unfamiliar with Elizabeth Warren, here is some further background.
http://www.time.com/time/magazine/article/0,9171,1904151-2,00.html Riding herd on the bailout.
http://search.time.com/results.html?N=0&Nty=1&Ntt=elizabeth+warren&btnSearch.x=0&btnSearch.y=0&btnSearch=Search Just pick any article.
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