Americans See 18% of Wealth Vanish

The WSJ reports that Americans have seen 18% of their wealth vanish in 2008. That’s a rather conservative estimate because they go on in the piece to note some folks have lost upwards of 35% of their wealth. I’ve talked to friends who have lost 40% or more in the past few months.

Given this terribly bleak news about how Americans are seeing their life’s savings and investments disappear, coupled with news like the tent cities popping up around the nation and ever rising unemployment rates, I don’t understand how President Obama can say the “economic crisis ‘not as bad as we think.'”

I understand the goal is to encourage economic confidence and get consumers back out their spending, however, the majority of economists on both sides of the aisle have made it clear this is the worst recession in decades and it’s bordering on a depression.

I’m all for President Obama sounding hopeful on the economy and I noted here a while back when Bill Clinton said Obama needed to sound more hopeful, that I agreed with Clinton. I don’t think glossing over what is really happening is the right way to go about increasing hope. We had that with the last administration. I expect better from President Obama.

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3 Responses to Americans See 18% of Wealth Vanish

  1. SBO says:


    Those of your friends who have lost 40%+ of their wealth most likely lost it in the markets, whose pace and performance aren’t in direct correlation with the broader economy. The markets right now are not solely based on fundamentals – much of the downturn we have seen recently has been based on investor sentiment. Look at the relation of the economy, the VIX and the S&P performance, and you’ll see the correlation.

    So much of the recent bear market can be attributed to Pres Obama’s negative tone, Congress’ bloated pork stimulus proposal, and Geithner’s lack of clarity. Markets, after all, function on certainty. This may not be Obama’s economy, but it is his bear market.

    If Obama is expressing certainty that the markets have sucked, do suck, and will suck, investors price it into the market. It’s okay if market will suck, as long as your Treasury secretary can explain a clear path out of the mire. Geithner never showed the way out – and the markets responded accordingly. This is where “hope” comes in – but “hope” isn’t a strategy. It has to come as part of a definitive plan.

    And optimism isn’t a bad thing for markets – FDR expressed eternal optimism in the face of years of ongoing trial and error – and to be blunt, dismal failure. Nobody faulted him. I don’t think we should fault Obama for his “optimism”. It is sorely needed at this point.

  2. SBO

    I think Obama needs to be honest and optimistic. That is in effect what I said.

  3. SBO says:


    If that’s what you meant, then what exactly is Pres Obama “glossing over”? His tone, if anything, has been overly-negative, and not in keeping with his message of “hope” Can you provide me with some concrete, in-context examples of what you mean?