Wednesday, September 18, 2013

Five years after bailouts, the rich are even richer

The super-rich are doing super well -- and why not? They deserve it after sending financial markets into a tailspin, plunging the global economy into a deep recession, and bankrupting governments around the world.

Oh wait.

Over the last three years of recovery, income for the top five percent has grown more than five percent while income for the rest of us fell. 

Think Progress reports:
Overall income growth has been paltry since the recession, according to the Census report. After median household income fell for two years, it has leveled off, seeing virtually no growth over the past two. It was $51,017 in 2012, 8.3 percent lower than in 2007. 
But the rich are doing far better. The top 5 percent was making $191,157 or more in 2012, while the bottom fifth made $20,599 or less. 
It’s amazing how little has changed in five years. Economist Dean Baker writes:
As we mark the fifth anniversary of the Wall Street bailouts, it is clear that little has changed in the way they do business. They are still engaging in the same sorts of market manipulation and tax gaming as they did before the crisis.
The weak conditions on the bailout money had no lasting effect in areas like executive compensation. The industry itself is more concentrated than ever as the big banks used the crisis to merge with other banks, making them even bigger. And the Dodd-Frank reforms have been watered down to the extent that many are now pointless.
Five years ago, this seemed impossible. In September of 2008, the world was on the brink of economic meltdown. Governments scrambled to rescue big banks. Fed Chairman Ben Bernanke and Treasury Secretary Henry Paulson gave grim reports to the nation. They said unprecedented intervention was needed and they assured us that sweeping regulatory reforms would follow.

That was right after huge debts that piled up in a shadow banking system popped the housing bubble. The iconic investment giant Lehman Brothers collapsed, sending shockwaves through the world financial system and taking down banks and corporations worldwide. There was long overdue rage directed at the greedy CEOs and bankers who made billions off of predatory subprime mortgages and complex financial instruments – literally betting on people losing their homes and lifesavings.

There was even talk of nationalizing the banks. At the very least, a system overhaul was promised, with tighter regulations to stop the reckless gambling of Wall Street’s “casino culture.”

But today the casino is still pulling in huge profits – thanks to taxpayer money that rescued it in the first place. Remember when we were told the taxpayer bailout program called TARP (Troubled Asset Relief Program) was necessary to help underwater homeowners? That didn't happen. It was supposed to help banks start lending again as well, and that didn't happen either. The banks sat on enormous stockpiles of money. Even up to the first three months of 2012, major banks cut lending by $24 million.

All of that free government money that went to Wall Street resulted in an unprecedented transfer of wealth from the middle class to the super-rich. As the government took on the colossal debts of the high finance fraudsters, it led to soaring deficits and the ensuing budget cuts that devastated public services and the social safety net – all in the name of austerity.

It was a grand heist by the rich against middle-class workers and the poor.

Five years after the 2008 crash, 95 percent of gains made since the recovery have gone to the top 1 percent. Meanwhile for the bottom 60 percent wages have been stagnant or declining. And almost 25 percent of homeowners with mortgages are underwater.

So that wonderful recovery we’ve all heard about since the onset of the Great Recession? It’s been a recovery almost exclusively for the Wall Street tycoons who engineered the economic crisis. The rest of us are still paying for it.

According to the Guardian:
Five years after the financial crisis, America's super-rich have recovered all their losses to see their wealth reach an all-time high.
According to Forbes magazine the 400 wealthiest Americans are worth a record $2.02 trillion, up from $1.7tn in 2012, a collective fortune slightly bigger than Russia's economy. In another sign of fizziness at the top of the economy, the cost to enter the billionaires' club has also gone up to levels not seen since the 2008 crash. In 2013, an aspiring plutocrat needs at least $1.3bn to make the Forbes list
In the same five years that the rich have been getting richer and workers’ wages remain stagnant, we’ve seen an all-out war on American workers in the form of “right to work” for less laws and other anti-worker attacks by right-wing groups like ALEC and the Koch Brothers.

Five years is long enough. It’s time to fight back for workers and demand a recovery for the middle class.