Our future hinges on just ONE thing…

How the foreclosure crisis impacts our country’s standard of living from this point forward will all come down to how we handle ONE thing.  We either change that one thing, or most assuredly we will at best continue to experience in the future more of what we’ve experienced to-date.  It will not get better.  It will only worsen and worsen significantly… unless we change the ONE thing.

A country’s “standard of living” includes such factors as income, quality employment, class disparity, poverty rate, quality and affordability of housing, gross domestic product, inflation rate, availability of education, life expectancy, infrastructure, economic and political stability and personal safety. Our country’s standard of living is what dictates our quality of life, and while money can’t buy us love, it does buy our standard of living.

There is nothing capable of destroying the wealth of our country’s 99 percent faster or more permanently that the foreclosure crisis, so there’s nothing capable of lowering the 99 percent’s standard of living more dramatically than the ongoing wave of foreclosures.   Zillow’s report published in December of 2010 showed that U.S. homeowners have lost $9 trillion since the housing market’s peak in 2006, and $1.7 trillion of that total was lost in 2010 alone.  And that same report showed that it’s getting worse.

  • Residential property values fell by 63% more in 2010 than in 2009.
  • U.S. homeowners lost $680 million in the first half of 2010, but lost $1 trillion in the second half of the year.

Evidently, the pace of the decline in residential property values is accelerating.  If consumer wealth was wiped out at the same pace in 2011, we’d be just under $11 trillion in lost wealth today, but we’ve probably already passed the $11 trillion mark, because the decline in values escalated in 2011 over 2010.

So, how about for 2012… should we assume $2.5 trillion lost for the year?  Based on those numbers, by the end of 2012, U.S. homeowners will have lost right around $15 trillion in accumulated equity, an amount that, at 50 years old, won’t be made up in my lifetime… and three times the amount of equity created between 2001 and 2006.

In addition, it’s important to consider that our country has had a very serious problem with income and wealth inequality for a long time, and the wealth lost due to the foreclosure crisis is making that problem exponentially worse.  According to IRS data, in 1988, the average American made $33,400 adjusted for inflation, and in 2008, nothing had changed… the average American still made $33,000.  Meanwhile, if you made $380,000 a year, then your income increased by 33 percent over the last 20 years.  And, of course, stock market gains make the disparity much worse.

Check out the rest here…

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