Recovery sees private wealth soaring $9T, thank Obama?

[expat_panama]

Since the recovery began 2-1/2 years ago private household wealth has increased by almost $9Trillion while private debt's been falling steadily. It's all in "Balance Sheet of Households" on page 104 of the Fed's latest flow of funds report. While some say we should thank Obama for handling the economy so well, others would complain that American households still haven't recouped $8Trillion in losses since the 2007 peak.

More info:

FRB: Z.1 Release--Flow of Funds Accounts of the United States--June 9, 2011
Household Wealth Gets Strong Bounce Even as Home Equity Falls

 

[uscitizen]

Yah the rich got richer.

Party!

 

[Mr. H.]

Isn't this just a reflection of stock market performance?
'07 was a crazy year for stocks as well as commodities. Plus, home values were so inflated it's rediculous.

 

[expat_panama]

Yah the rich got richer...

Ordinarily I find the whole 'wealth inequality' schtick to be a bogus sham but for a few years now we got 5 or 6 million fewer people working while average wealth and average incomes have soared.

OK, so while one explanation is inequality of benefits, but how about the possibility that there was a greater inequality of losses leading up to the 2009 bottom?

 

[expat_panama]

Isn't this just a reflection of stock market performance?

That's pretty much my take. Stocks went up from $6T to $9T while real estate fell from $20T to $18T.

 

[Toro]

Thank Bernanke.

It's a canard to blame or not blame Obama for not being back at the 2007 peak. We were at that level in 2007 because of a massive, artificial housing bubble that should never have existed. Without that bubble, we wouldn't be in the mess we are today. What should Obama do, create another, bigger bubble?

We have to let the economy run its course. We didn't do that at the beginning of the century and now we are paying for it.

 

[ShackledNation]

Do these numbers take inflation into account? Because have more money means nothing if everything is more expensive. Also, what recovery? Unemployment numbers 2 1/2 years ago were lower than they are now. Causation also needs to be explained as does the usefulness of net worth as a measure of economic health (it could also mean there is just another bubble).

 

[ShackledNation]

Yah the rich got richer...

Ordinarily I find the whole 'wealth inequality' schtick to be a bogus sham but for a few years now we got 5 or 6 million fewer people working while average wealth and average incomes have soared.

OK, so while one explanation is inequality of benefits, but how about the possibility that there was a greater inequality of losses leading up to the 2009 bottom?

You make a good point. The reason for this inequality, IMO, is that government bails out its rich friends and contributors. The auto industry was bailed out, the banking industry was bailed out, all of these business people that should have failed did not. They got to keep their money and profits despite their mistakes. This is what happens when you let the government meddle in the economy. We have let inefficient industries suck up wealth when they should have failed or restructured themselves.

 

[expat_panama]

Thank Bernanke. It's a canard to blame or not blame Obama for not being back at the 2007 peak. We were at that level in 2007 because of a massive, artificial housing bubble...

Blaming Obama for the real estate price surge before he took office is stupid lazy thinking. It's just like blaming Bernanke. Obama was elected in '08, Bernanke was named in '06, and the ten-year real estate price surge was from '97-'06, which is why a lot of people like to blame Barny Frank and his great big Fannie Mae.

My take is they'd be off the mark too because while housing was big it was not that important:

Stocks was far bigger, and they didn't tank until Obama turned America anti-investor in late '08.

 

[expat_panama]

Do these numbers take inflation into account?

No, population growth is overlooked too. Here's average wealth per household in 2011 dollars:

It shows households are doing better now than they did during the Clinton economy, but not as good as they did with GWBush.

 

[Toro]

Thank Bernanke. It's a canard to blame or not blame Obama for not being back at the 2007 peak. We were at that level in 2007 because of a massive, artificial housing bubble...

Blaming Obama for the real estate price surge before he took office is stupid lazy thinking. It's just like blaming Bernanke. Obama was elected in '08, Bernanke was named in '06, and the ten-year real estate price surge was from '97-'06, which is why a lot of people like to blame Barny Frank and his great big Fannie Mae.

My take is they'd be off the mark too because while housing was big it was not that important:

Stocks was far bigger, and they didn't tank until Obama turned America anti-investor in late '08.

I agree that blaming Obama for the real estate surge is stupid and lazy. Just like blaming him for stocks cratering in 2008 is stupid and lazy. It's like blaming Bush for the crash in tech stocks in 2001 and 2002.

Bernanke is merely continuing the policies of Greenspan. We had massive bubbles in stocks and housing within a decade. Bubbles cannot occur without excess liquidity, of which both Greenspan and the Bernank have been happy to supply.

 

[JRK]

Cheney's deficit does not matter does not have anything to do with a 1.5 trillion dollar debt. that quote was about the deficits we faced during GWB presidency when we were fighting 2 wars and the yearly deficit was 2-500 billion

 

[JRK]

3/2009
DJIA was 6500
today its over 12,000

If credit is he event where trying to do here than let us give thanks to the taxpayer who funded tarp

 

[Wonky Pundit]

Thank Bernanke. It's a canard to blame or not blame Obama for not being back at the 2007 peak. We were at that level in 2007 because of a massive, artificial housing bubble...

Blaming Obama for the real estate price surge before he took office is stupid lazy thinking. It's just like blaming Bernanke. Obama was elected in '08, Bernanke was named in '06, and the ten-year real estate price surge was from '97-'06, which is why a lot of people like to blame Barny Frank and his great big Fannie Mae.

My take is they'd be off the mark too because while housing was big it was not that important:

Stocks was far bigger, and they didn't tank until Obama turned America anti-investor in late '08.

In late '08 Obama had not even taken office. Are you implying that he was still able to make stocks tank?

 

[Avorysuds]

Thank Bernanke.

It's a canard to blame or not blame Obama for not being back at the 2007 peak. We were at that level in 2007 because of a massive, artificial housing bubble that should never have existed. Without that bubble, we wouldn't be in the mess we are today. What should Obama do, create another, bigger bubble?

We have to let the economy run its course. We didn't do that at the beginning of the century and now we are paying for it.

You're right but you also seem to be wrong. Obama should have let it all go rather than bail out the rich. Obama has tried relentlessly to create another bubble, remember the housing tax credit, cash for clunkers? Obama has been floating an economy that still needs a big downturn to liquidate all the bad debt so we can move on.

Like under FDR (Oh no history) the idea is when in a recession/depression the Government figure it needs to charge more for products so that it can keep wages high... Of course that's the opposite of what should be happening and Obama like Bernanke have gone out of their way to not let prices drop to where average paying jobs can afford these things.

I think it’s so simplistic, the logic that artificially inflated prices are a bad thing, so letting prices drop to the markets true value would yield a much less painful and quicker correction. In fact I think it’s so basic and simplistic that it’s embarrassing to those that wasted trillions on stimulus’s and bail outs.

However, it’s all about buying votes, and FDR proved that even while fixing absolutely nothing, if you make the peasants believe that without them they would be worse off, then they own these peasants and their votes. Obama bailed out the rich and the liberal party thanked him for it… yet on these boards today there will be threads about how the Republicans love the rich, despite Obama passing the tax cuts for rich too… It’s all a silly game as both the parties (elected officials) work together for the same common goal, keep the rich, rich, and funny story almost everyone in congress is filthy rich, Democrat or Republican.

 

[Toro]

Thank Bernanke.

It's a canard to blame or not blame Obama for not being back at the 2007 peak. We were at that level in 2007 because of a massive, artificial housing bubble that should never have existed. Without that bubble, we wouldn't be in the mess we are today. What should Obama do, create another, bigger bubble?

We have to let the economy run its course. We didn't do that at the beginning of the century and now we are paying for it.

You're right but you also seem to be wrong. Obama should have let it all go rather than bail out the rich. Obama has tried relentlessly to create another bubble, remember the housing tax credit, cash for clunkers? Obama has been floating an economy that still needs a big downturn to liquidate all the bad debt so we can move on.

Like under FDR (Oh no history) the idea is when in a recession/depression the Government figure it needs to charge more for products so that it can keep wages high... Of course that's the opposite of what should be happening and Obama like Bernanke have gone out of their way to not let prices drop to where average paying jobs can afford these things.

I think it’s so simplistic, the logic that artificially inflated prices are a bad thing, so letting prices drop to the markets true value would yield a much less painful and quicker correction. In fact I think it’s so basic and simplistic that it’s embarrassing to those that wasted trillions on stimulus’s and bail outs.

However, it’s all about buying votes, and FDR proved that even while fixing absolutely nothing, if you make the peasants believe that without them they would be worse off, then they own these peasants and their votes. Obama bailed out the rich and the liberal party thanked him for it… yet on these boards today there will be threads about how the Republicans love the rich, despite Obama passing the tax cuts for rich too… It’s all a silly game as both the parties (elected officials) work together for the same common goal, keep the rich, rich, and funny story almost everyone in congress is filthy rich, Democrat or Republican.

Obama should have let what all go? Most of the bailout programs such as Tarp were created under Bush. And Bush made the right decisions. We were on the verge of Depression 2.0 had Bush not stepped in as the money markets were on the verge of imploding. As much as I loathe the bailouts, and as much as I agree that we have to clear out the excesses, Bush did the right thing by backstopping the financial system.

 

[Avorysuds]

Thank Bernanke.

It's a canard to blame or not blame Obama for not being back at the 2007 peak. We were at that level in 2007 because of a massive, artificial housing bubble that should never have existed. Without that bubble, we wouldn't be in the mess we are today. What should Obama do, create another, bigger bubble?

We have to let the economy run its course. We didn't do that at the beginning of the century and now we are paying for it.

You're right but you also seem to be wrong. Obama should have let it all go rather than bail out the rich. Obama has tried relentlessly to create another bubble, remember the housing tax credit, cash for clunkers? Obama has been floating an economy that still needs a big downturn to liquidate all the bad debt so we can move on.

Like under FDR (Oh no history) the idea is when in a recession/depression the Government figure it needs to charge more for products so that it can keep wages high... Of course that's the opposite of what should be happening and Obama like Bernanke have gone out of their way to not let prices drop to where average paying jobs can afford these things.

I think it’s so simplistic, the logic that artificially inflated prices are a bad thing, so letting prices drop to the markets true value would yield a much less painful and quicker correction. In fact I think it’s so basic and simplistic that it’s embarrassing to those that wasted trillions on stimulus’s and bail outs.

However, it’s all about buying votes, and FDR proved that even while fixing absolutely nothing, if you make the peasants believe that without them they would be worse off, then they own these peasants and their votes. Obama bailed out the rich and the liberal party thanked him for it… yet on these boards today there will be threads about how the Republicans love the rich, despite Obama passing the tax cuts for rich too… It’s all a silly game as both the parties (elected officials) work together for the same common goal, keep the rich, rich, and funny story almost everyone in congress is filthy rich, Democrat or Republican.

Obama should have let what all go? Most of the bailout programs such as Tarp were created under Bush. And Bush made the right decisions. We were on the verge of Depression 2.0 had Bush not stepped in as the money markets were on the verge of imploding. As much as I loathe the bailouts, and as much as I agree that we have to clear out the excesses, Bush did the right thing by backstopping the financial system.

Tarp was bad.

Bush was bad for doing it and Obama was bad for keeping it going.

What I meant though, was Obama should have not allowed the fed to do Trillions in stimulus nor done his stimulus.

It's the Hoover mistake. We give "free markets" 6 months to fix a huge problem but we'll give bailouts and endless Government programs/spending 10+ years.

If tarp was avoided tell me what would have happened, and try and keep it all in context. What I mean by context is usually we hear about how hard it would be on the little guy... Well, what happens to the rich? Oh, yeah... the rich lose their money on all that bad investment, in fact they would have taken the biggest beating by far, not the little guy... Pottersvile goes out of biz, OH NO! Leave it up to Government to keep Mr. Potter richer than ever.

Like I said, the real fix is embarrassingly easy and simplistic, but that won’t buy votes. Obama/Bush/Governments job now is to make the peons feel as if without them growing (Government) life would be unbearable.

 

[Wiseacre]

I'm not seeing the 9 trillion gain in private wealth, can somebody explain it? I can believe a sizeable gain in the stcok market, which oughta be offset somewhat by losses in the preceding drop and also the decline in realestate values. Hard to believe we're up by 9 trillion, how is it that we don't see a good jump in GDP if that is the case?

 

[expat_panama]

...the bailout programs such as Tarp were created under Bush...

Let's sort this out.

The TARP is called a 'bailout' because at first money went from the federal treasury to private companies. So when all the money all went back with interest it became a private company bailout of the gov't?

Some of Obama's stimulus went to fund teaching African men how to wash their penises. While I can understand why that should be called a 'stimulus' I don't think we want a return on that stuff...

 

[Toro]

Avory

Tarp was part of a series of programs which the government used to supply liquidity into the financial system. It helped break the back of a deadly downward spiral that threatened the implosion of the financial system. When the First Reserve money market fund was on the verge of breaking the buck, it threatened a massive bank run on the entire cash system. The Fed backstopping the money markets prevented that. It was scary when it was happening but it's even scarier when I talk to colleagues on Wall Street and find out how close we were.