And perhaps that 70 percent would handle it nicely, had we not shipped most of our solid upper-middle class jobs overseas.
It's more complex than "people lived above their means".
Frankly, the expectation that a hard working father can provide for his family, own a home and maybe work harder and send a kid to school is the right one to set. People tried to meet that expectation, and failed for a lot of reasons.
If you look at what our buying power per hour worked is, it's not all that hard to see why both parents work, kids in day care, and such. That's a clear indicator that we've got a very poor alignment between what is reasonable to expect, and what is the reality where available jobs are concerned, and the wage they pay.
The other contributing factor here is the move to push risk onto people. That nailed me personally! Lost a home, and it happened during a time when risk was pushed my way, "to cut costs". Yeah. Love that.
A very high percentage of the bankruptcies are home owners living lean, but get nailed by health care, or some other risk factor that puts them under. The reason this occurs is people ARE living lean, for the most part. They are doing that because THEY HAVE TO DO THAT. Why? Buying power per hour worked is at an all time low, that's why.
These massive layoffs only exacerbate the situation too.
It's bad right now. It's been building for a while. Every single year I've been employed since High School, I've managed to invest in my own skills, add value, and see that in terms of higher income. The costs and risk we are seeing have risen quicker than those gains! That's been true now for about 8 years. (wonder why) Result is a nice wage if you look at just dollars and years. However, if you subtract the higher risk we bear now, and multiply those dollars by their actual buying power, my personal income is about 2000 level, if not a bit worse!
Back then my kids were young, and we were a starter family. Now it's a lot more money to get through the month, and that's what most people are seeing.
In response to that, I've scaled down REPEATEDLY. Still not enough. Lost a home and am living absolutely SMALL now. That's barely enough, and costs and risk still continue to rise.
That's why homes are failing.
Edited by potatohead, Sun Feb 15, 2009 3:04 PM.