We Are Witnessing the Destruction of the American Middle Class – Wall Street Underground

By Nick Guarino | January 21, 2010

American-style capitalism created the vast middle class. It is not a perfect system. But with all our warts and pimples, we brought wealth to the masses. Until then, ordinary people were basically wage slaves.

Now our system is being destroyed. The middle class is getting wiped out. Socialism is replacing our capitalist system. Socialism and Russian-style oligarchs, funded by government. This is no accident.

With capitalism ending, we are going back to the ugly systems of the past. The very, very rich lead elite lives. The majority of people become wage slaves. Land serfs, who live hand to mouth and own nothing.

The unprecedented wealth of the middle classes will be no more. Things like home ownership, self employment, vacations and travel will be done away with. The “elite” will use the excuse of climate change to re-make the world, in very ugly ways. If you think taxes are high now, wait and see how they nail you for your “carbon imprint.”

Too many cars on the road? You won’t have to worry about that much longer. Last year only 10 million cars were sold in America (from a peek of over 19 million) and 15 million cars were scrapped. The last time we scrapped more cars than we produced was World War II.

And even these numbers will get worse for the next several years. In the near future, cars will be a luxury for the wealthy. The masses won’t be able to afford them. This has already started: global car sales are half what they were, falling further each year.

Public transportation? People will be herded into overcrowded “light rail” trains and smelly buses like cattle, as they go to their slave-labor jobs.

Nice-size houses, with your own yard and garden? Forget it. A pool… no way. We’re depopulating the rural countryside. More and more, we pack the masses into cities. They live in ever-denser, tiny apartments. Often stacked one on top of another, in high-rise concrete towers. Just like in Europe and the old Soviet Union.

Already, 82% of Americans live in urban areas. A huge record-high number. It keeps going up. Having a back yard and a garage will soon be a luxury few will enjoy. Never mind a car.

Isn’t it interesting? We were told we were running out of houses. That is why real estate would keep rising forever. You were urged to buy at once, before prices really soared.

Now we have the biggest number of vacant houses in U.S. history. We have the most vacant apartments and rental properties ever. Housing prices are collapsing, as demand falls apart.

Where did the people go? The ones who were going to drive demand for all this over-priced housing? Well, it’s the sardine principle. Two people can live in a 2000-square-foot home. Or 20 people can be packed in, barracks-style.

Those inner city four-bedroom apartments? Often eight, ten people or more live there now. Most of them not working and on welfare. As more people recently impoverished keep moving to the cities, you will see more and more of this.

Birth rates have plunged. Poverty is causing divorce rates to soar, ripping families apart. Most children in America are raised in single parent households. When they come home from school the microwave welcomes them for dinner. For parental guidance they have video games to play. Games where they get points for murdering people. Call it practice for the new age world they will live in.

We are seeing the impoverishment and destruction of America’s middle class. Millions of once-affluent people are losing their jobs. Their homes. Their cars and savings.

Soon they will lose their freedoms as well. That always happens in depressions. We are on the eve of another dark age.

It’s the same story in England and Europe. This is taking place globally. All because Wall Street, the bankers and politicians let their greed get the better of them. They created the derivatives casino, that wiped out the global financial system and everyone is paying the price.

You need to understand this: the world is broke. The greatest time of prosperity the world has ever seen HAS come to a abrupt end. What comes next will be hell on earth. Think Katrina, Haiti, Bosnia, Germany at the end of World War II all rolled up into one. I am not joking here.

One sign that the impoverishment of masses has started is the foreclosure crisis. For a brief while last year, foreclosures seemed to level off. Really they were held off. Now they are soaring again. They jumped 21% from the second to third quarter last year. And that greatly understates the real figure. Here’s why.

Once homeowners go 60 days past due on their mortgage, they’re in default. When they get 90 days behind, foreclosure starts. 60 days past due, that loan has to be classified as non-performing. The bank once in foreclosure must take a hit on its balance sheet. At least that is how they used to do it, when we had honest accounting.

Guess what’s happening now? 90 days pass. But the banks aren’t classifying loans as non-performing. They are not filing for foreclosure so they don’t have to book the loss.

Reason is, there are too damn many of them. If banks start recording all their foreclosures, their capital will vanish in an instant. That would allow the public to see that our biggest banks are stone cold dead broke.

Here is a chart published by the Federal Reserve. It shows you the incredible, record-breaking total net charge off of bad loans at the nation’s banks. As you can see, it is like nothing that we have ever experienced before. Each month it soars higher.

But here is the hell of it. As bad as it is, the unreported bad loans banks are hiding are even worse. They are hiding over half the bad loan charge-offs that are really occurring.

The last thing a bank or money market fund wants its depositors to know is that the loans it made are going bad en masse — and it is stone cold broke. Because of massive derivatives leverage, they are have lost all their depositors money.

(Forget the guarantees, when there is one. They ain’t gonna help you. The FDIC insurance system also is broke. It requires another bailout.)

Eventually the kid gloves come off. Government nationalizes your bank and your account. You can’t get at your money. How long do you think it will take the Obama administration to do this, when the dead-broke, too-big-to-fail banks are beyond bailouts?

Once homeowners go 40, 50 days past due on their mortgages, that’s typically a death sentence. They can’t catch up. They never pay the mortgage. The hole is too deep. As we speak, 30 million homes in America are past due on their mortgages and in default.

Now add the fact that many people owe far more than their homes are worth. Their incentive to pay is gone. Another reason foreclosures are skyrocketing again.

What about the “workouts?” A dismal failure. Only 10% of eligible people get a workout. The rest don’t even bother to apply. And nearly all who get a workout less then 5% of the 10% who apply, end up in foreclosure again.

The bankers’ own figures prove it. Workouts merely prolong the date with destiny. They make the bank’s loss even bigger.

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