The center class is disappearing and

The center class is disappearing and the housing industry is going through a double dip due to the expiration of the first time house buyer's tax credit. How in the heck did we let this happen? Politically, the middle class utilize 90% of the voting power, great with corporations given unlimited investing for campaigns, the stiffened regulations of the bankruptcy code, and the malfunction of the housing market, the middle class might be shrinking and the wedge between the a couple of is growing, with the banks and large organizations being the big winners.

Now, our own country loves things called bubbles. A bubble is an artificially made economic situation such as the stock bubble whose burst caused the Great Depression, insurance policy derivatives, gas speculation, the technical bubble in the 90s, the real estate bubble in the 2000's, Here is a good article on economic bubbles. A further bubble has formed and just like that will, POP goes the double drop! The most recent bubble, its called the first-time home buyer's tax credit.

Well, HUD secretary Shaun Donovan stated in May that the housing market "has started to turn the corner" and then mentioned earlier this month that the market is throughout "significantly better shape than anyone predicted" last year. That's because of the tax credit, a $8, 000 returnab tax credit for people earning below $70, 000 (phasing out from seventy dollars, 000 to $90, 000) for many who have not owned a home for the past 36 months.

Since this tax credit has ended, we have seen housing prices dip 25% in San Francisco since the taxes credit expired and the volume of houses in San Diego decrease from a couple of, 200 in June to 1, six hundred in July. I'm not saying that this is causing a double dip, economic conditions like these are prediction, but even clouds and rainfall are a surprise to any weatherman.

The awkward thing is how well this worked. As soon as the tax credit out of date, housing prices theoretically will lower $8, 000. That's how the industry works. But this is way more serious in some places, $8, 000 is a small percent of home value to decrease compared to what has happened to the market since its expiration.

I will point out this, we are not out of it. San Diego has a very good economy, but it is absolutely not enough to stave off economic downturns. The current economic downturn affected the world, therefore don't be so fast to say the town you live in is insulated, this kind of goes duly for my friends in Texas and their stubbornly resilient economic climate.

Now we want another tax credit rating? It may hold off the problem, but it is absolutely not a long term solution, its another bubble. Also, the mere discussion of this kind of credit will take buyer's off the marketplace at least until they decide if to buy, so it is in effect, harmful to actually bring it up.

But that is not the end from it - it is settled that the center class have and will bear most of the grunt from this dip and double dip. Buying a home now in case much different than it was before. Normally, it was a given that home ownership is usually a safe investment. Housing always appreciates because God loves the middle course, right? If you are buying a home to live in it, buy a home. With rates of interest so low, the mortgage interest tax write off is becoming inconsequential, but still, you can build equity into your house as you pay off your observe, but the house still may or may not embrace value over the next 5 years.

Morbid projection, but hey, I think that housing prices still have space to drop. Check out the charts below. In the past, our housing prices are completely inflated.

Now with this in mind, Karl Case, from the Case Schiller S&amp;P index has said "recovery is in sight". Housing prices are down about 30% and you can get a 15 twelve months fixed mortgage at 4% chiseled. Case says that the market goes down a bit in the fall and after that stabilize. This is happening at the same time which a growing number, 40% now, of economists think the double drop is coming.

But that is just a little piece of the puzzle. Lets check out the income gap between the upper and even middle class. At present, is at a all time high and income might be decreasing for everyone but the elite (and has been for the past 30 years). Today, each individual owns $94, 000 of our own country's national debt and counting. When this gap was at the greatest, so were the tax costs for the upper class, they paid a whopping 90%! Kinda makes your head rotate. Under Bush, the top tax speed was 35%, when it expires in some months it will roll up to 39% and hopefully for the rest of us typically the Bush cuts will be extended.

More, having lower tax rates regarding capital gains and hedge pay for managers is a big factor in typically the disappearing middle class. We have setup a system where any speculator who seem to holds an asset for a year and one day will pay a 15% tax rate on their earnings and no social security but the people they have doing work for them are paying a 30 -- 40% tax rate plus interpersonal security. Supporting a lower tax price for capital gains implies that making money on the latest financial scam much more valuable to our society than making money from a honest days work.

Private sector De-leveraging Individuals and businesses are de-leveraging for the first time since the Great Depression, which is the processes of getting rid of debt. The ultimate way to do this is simply pay it off (not likely to happen). Here, asset managers are selling their debt. What's the assets damage? Asset prices to slide and GDP to shrink.

Here is how de-leveraging will affect you. When you made $50, 000 a year and added $10, 000 a year towards your debt level during the bubble decades you were consuming $60, 000 per annum. When the bottom fell out your salary declined but you still have to pay off the debt. Now you make $45, 000 a year and are paying down your debt by $3, 000 a year for total consumption of $42, 000 a year. This illustration would reduce the typical Americans per year consumption by 30%. Multiply this kind of by 150 million working adults and you can understand why the great recession has long been so painful. And check out our individual debt levels!

Companies like Property Capital Solutions and sellshortsandiego. possuindo have been able to take advantage of this market buy purchasing some of the bank's bad possessions and liquidating the debt at the same time mainly because helping underwater mortgagor's with their finances. Doing this resets the market, but with a lower fair market value.

Redistribution of wealth is a phrase that when enunciated congers up images of welfare babies and a freeloading underclass, although is this how wealth is truly redistributed? Since the start of the financial crisis over $11 trillion dollars has been lent, invested or guaranteed by government plus the Federal Reserve to save the financial system. Most of this money has been used to buy and/or guarantee the bad debts with the money changers and protect the best players on Wall St. such as Goldman Sacs from going a few years without a ridiculously large bonus.

The idea is that these large international financial interest will then turn around and loan the American people back into success. The problem is that an over indebted inhabitants with declining incomes doesn't associated E-Lites vouchers with best debtor so the money changers are taking the free money we have become giving them and buying risk free government personal debt to siphon off a little more for themselves at taxpayer expense.

When we think of redistribution of wealth should good of the poor or the rich? Which in turn group is deploying a workforce of lobbyists to Washington in order to rewrite laws in their interest? Which often group is funding political promotions? Which group controls the organizations and the lobbying arms that work for them? Ask yourself, would you rather be considered a bailed out business executive or one of the 30, 000 people inside Atlanta who showed up to put the name on a waiting list regarding 455 housing vouchers? Would you like to possibly be one of the thousands of corporations receiving taxes brakes and government contracts, or perhaps one of the more than 40 million Vacationers on food stamps (administered by simply JP Morgan of course).

Consumption Tax I hate to get political here, but here I go for a quick second. Let's get some justness into our tax code. The Bush tax cuts created one other bubble. Republicans always call for a duty cut, but for whom? Notably, these tax cuts kept the economy coming from slumping, it drove the Dow to an all time high, but at the end of the Bush administration, no matter what they did to help the pioneers of industry and the economy rigidly together with skillfully turned their back on this economic achievements and caused the 2nd largest depression in our nation's history. Then, the banks convinced people to cough up the bill and it worked well! Not only did we cut on earth out of their taxes, but we all bailed them out because they have been too big to fail!!! Redistribute this, The usa!

Reagan used to always say, "government isn't the solution, government is the issue. " Well, I don't think the federal government is the problem, our system is. With this new unlimited spending for strategies, corporations can launch anyone straight into office by outspending the other a particular. Its not a democracy, its a new plutocracy, or a government for the high level. The elite is the problem because they control the government, and they are reaping every benefit at every angle (even examine marginal tax rates in the Plutocracy chart above).

Let's be clear on a single thing, government is not the solution both and cutting taxes, well, their intentions are dubious at best (mainly because most tax cuts by recent were for the rich). Maybe a consumption tax like Huckabee's Fair Tax will be new in our upcoming (Fair Tax wont raise adequate revenue for the pickle we are in). Our individuals liberties will be safeguarded by giving us the ability to determine how much we want to be taxed by just how much we consume. With this, taxes will be taken when we have spent your money, not earned, so we will have the alternative to pay off more debt with the excessive amount of funds.

Also, with a use tax, there will be more cash liquidity in the credit system and increase businesses' ability to borrow. This will alleviate typically the credit crises by inserting more capital into the system. Further, every person, legal and illegal, will be spending into the system. Sounds like a helpful solution, no? This measure will likely tone down the ever growing IRS.

The 2nd world war took us away from our first depression, lets not really let this happen again. Under few circumstances, none of them good, should we see an environment where a majority of developing countries are under a massive war reconstruction except for America. During WORLD WAR II, our country was able to reduce usage and waste and put everyone to be effective at livable wages, but previously the entire worlds productive capacity have been destroyed except for in the U. Beds. When this country was able to fight collectively for a common purpose, we came out on top. With the incredibly polarized political environment, our country is far from being able to unite. Now that we have a common enemy, let's start our battle to reclaim our country.

We must focus on personal responsibility, supporting our neighbors, hard work, doing the right issue, and patience in order to get out of this. Additionally, we need to educate ourselves to what is good for us and stray away from coverage that unjustly enrich the upper course (bailouts), cheap credit available just to the corporate and banking elites plus prolong our depression (home consumer tax credits). Try to stay away from temporary political arguments and work toward changing our system entirely.