Thursday, 23 October 2014

A Fact of USA Life Coming UK Way - The Middle Class Are Skint

A Fact of USA Life Coming UK Way - The Middle Class Are Skint

This sums the lot up of the median income middle class in the USA. Sound familiar?

With the thankful exception of healthcare you could transatlantocate much of this to the UK at least, probably Ireland and some other countries too where the middle class are not really making their middle ends meet.

A crushing statistic for the USA is that the former largest employer , GM, payed an inflation adjusted $50 USD per hour to their 1950s workforce. Today's largest single employer in the US is Wallmart who pay $8. Hardly middle class, but the economic principle behind this affects the middle class. For one wages have not kept up with the real inflationary pressures of life, and they have not therefore kept up with the expectationary spends and savings of people. For the other, the great working class are  no longer feeding the pyramids of insurance, the coffers of savings plans or the local hardware store on saturday mornings. They instead have split into pour subsiders and a new class, the skilled self employed blue collar workers who have a ballsy attitude to risk and loans and are the winners both sides of the Atlantic.

What has far outstripped wages growth for my generation both sides of the Pond is consumer debt ie non capital item debt. Also there is the new insidious perennial debt- student loans which get deferred to interest only payments and installment 'holidays' and worse, never ending house debt and no real capital and often negative equity or inflation neutralised equity. You have to down size a long way to catch the wave of house price rises, and in the US, that means threatening to loose your health care just at the time when you need to secure a long term plan most.

My generation in the UK and probably this is reflected across the EU/EFTA, was not huge on consumer debt and had a cautious attitude to debt when it concerned all things apart from bricks and mortar, where we went quite bonkers, pouring flames on the 1990s and 2000s market which should have actually been declining in line with slow wage growth. Industry colluded, with 5 times salary, interest only , 110% mortgages which were basically sub prime in all but the state meddeling them. In fact the very laisez faire approach meant that people could simply lie about their income when applying for a mortgage, and cross fingers hope to die that interest rates did not go up, while equity did so they could climb the ladder further.  Some like me spotted this big time, and avoided buying houses in the slightly shadey areas they could afford, which have indeed proven the worst for negative equity and maintaince costs, and slow resale over time.

Read the artiicles, all 8 pages, and I will be back!!! The big con and the white russian hoards will be blogged on again.

No comments:

Post a Comment