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False Positive
The Two Americas

And it's not getting better

If you’re familiar with the layout of the Wall Street Journal’s front page, in print and on line, you know about the center-left column that itemizes news and business stories in magnificently written snippets, with page references or links for the full story. Last night there was an interesting juxtaposition between the top item and the second item on the list. The top item read: “MAJOR BANKS and Wall Street firms are unloading bad home loans, as more Americans fall behind on mortgage payments.” The second item read: “The Dow industrials surged 87.01 to a record 12741.86, fueled by Bernanke's testimony. The Dow transports and utilities hit records for the first time since 1998. The Nasdaq rose 1.2%.” It was unintentional on the Journal’s part, but there’s rarely been a more telling illustration of the two worlds of the American economy and the enormous gulf between them. There’s the world of the official figures, of a solid GDP, low unemployment, record-breaking days on Wall Street, record-breaking company profits, still relatively low interest rates and low inflation, all of it adding up to credit-grabbing by a White House under the illusion that we’re in a healthy, prosperous economy. We are, if you’re among those toward whom the Bush economic policies and tax cuts have been geared: Investors, the upper 5 to 10 percent crust of society, and anyone with oil stock in his portfolio.

We’re not, if you’re everybody else, including middle class wage salary earners who’ve discovered over the last few years what it’s like to have higher health insurance premiums than federal and state taxes taken out of their paychecks (as one example). The first item on the Wall Street Journal’s news-list tells it all: More Americans are falling behind on mortgage payments. The boom of the housing bubble is over. The gimmickry of those favorable lending rates—no-interest loans, adjustable-rate mortgages—are hitting their expiration dates. The higher-paying jobs homeowners were expecting, when they bought their expensive homes several years ago, are not materializing. Eviction notices are. (See below.) Meanwhile, the Journal is reporting that the median home price in the fourth quarter was down 2.7% from a year earlier to $219,300, still nowhere near what the average family can afford. So we get the economic world of the unofficial figures, of the families struggling to make ends meet despite two or three jobs, of debt interest devouring household savings, of families having to decide between medical care and car payments, or car payments and college payments, of children in their twenties returning home because they can’t make it on their own, at least not on their starting salaries, not if they’re working at Home Depot or Wal-Mart or any one of those big-boxed labor camps. On average, maybe the economy is doing all right. But it’s the skewed up numbers from the top that make things look more rosy than they are. They’re great at the top. They’re punishing anywhere below. And these are the good times. Imagine what the next recession will be like.

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