Are we in another bubble?

The United States has added more than $31 trillion dollars of household wealth since the crash of 2008, but that's not necessarily something to celebrate. According to the Global Wealth Report from Credit Suisse, wealth accumulation is outpacing income, which may be a sign of upcoming economic trouble.

The ratio of wealth to income is as high as it was during the Great Depression. Our rigged economy allows those at the top to hoard more riches, while at the same time, average incomes remain stagnant. The result is that middle-class wealth has actually declined during the same period.

There have been two times in our recent history when the wealth to income ratio reached similar heights. Once in 1999 before the dotcom bubble, and again in 2007 before the banksters crashed our economy.

According to the Credit Suisse report, the current rate of wealth gains “is a worrying signal given that abnormally high wealth income ratios have always signaled recession.” In other words, the super-rich are raking in cash from a soaring stock market, and that's a really bad sign for the rest of us.

Tim Yeager, the chair of the Arkansas Bankers Association, explained why we should be concerned about the wealth to income ratio. He said, “Stock market and financial industry wealth are always moving around looking for the highest returns, and [that] makes bubbles more likely.” And, we know from history what happens when those financial bubbles burst.

Our economy will never be stable while income and wealth inequality remains high. We need widespread prosperity that benefits more than just those at the top. Only then will we break the cycle of bubble and bust.

Comments

dollymajig's picture
dollymajig 7 years 48 weeks ago
#1

We are in a deflating bubble.

Gator Girl 7 years 48 weeks ago
#2

Yes, I believe that we are and I also believe that the bubble will burst by 2016.

dianhow 7 years 48 weeks ago
#3

Worst case scenario ' Bruce Rauner ( billionaire- former 'Boss -major stock holder of Chicago Sun Times' News Paper that endorsed him after NOT endorsing any candadate for 3 yrs ! Conflict of interest YES Chgo Tribune endoersed him too but they have endorsed GOP candidates for 100 yrs- Except 2008 Obama when McCain Palen team was a major joke ) If Rauner wins as Gov of Ilinois & GOP wins senate It will be a disaster for any one EXCEPT the powerful - wealthy - corps . Expect More blocking- more gov't shutdowns that cost taxpayers billions- Expect more privatizing of SS - whatever else GOP can get their hands on . Expect more right wing laws passed by far right judges like Citizens United- Money is Speech

Corps are People FIGHT BAck before we have another 'GILDED AGE '

GOP will keep refusing to take votes- more cutting of necessary services , allowing more pollution, cutting funding for education, teachers, head start , disabled. Dems have faults but not as dangerous as Rauner & his ilk GOP poses a threat to the dying middle class - to decent wages- to womens right to family planning . GOP candidates like Bruce Rauner push same old failed trickle down economcs - and more deregulation of Greedy C orps - GOP wants more corp tax cuts- loopholes- subsides . Rauner has made millions off nursing homes- without hiring enough care takers for sick old folks. Rauner has bought - fired workers & run Co's into bankrupsy . Rauner warned a lady executive at his CO 'I will bury you if you do NOT do as I say ! Bruce Rauner makes 25 K AN HOUR but says $ 10 an hour min wage is too high !! VOTE EARLY Take a Informed friend or two

leighmf's picture
leighmf 7 years 48 weeks ago
#4

How come Credit Suisse knows so much about what's going on?

Howard Laverne Stewart's picture
Howard Laverne ... 7 years 48 weeks ago
#5

Raising a progressive tax on the Rich would give the politicians more pork to play with.

Kend's picture
Kend 7 years 48 weeks ago
#6

Howard you are bang on. They are all ready blowing a trillion a year.

How is it when the stock market soars only the rich do well. What about everyone's 401 k's that I keep hearing about down there . Isn't that where all the unions, government pensions etc invest.

2950-10K's picture
2950-10K 7 years 48 weeks ago
#7

Not many notice the few making billions in wealth without work, but they sure as hell notice the many getting food stamps because of low income with work. The billionaire sponsored Teabag lie is loud with progressive truth barely audible.

Everyone will remember with disgust the Obama bailout of the too big to fail, in fact I'm sure when it happens Fox will pin the 2008 bailout on him too, but he still won't make a peep.

Alan Lunn's picture
Alan Lunn 7 years 48 weeks ago
#8

Kudos for a terrific new book. Every single adult in this nation should read it and every high-schooler taught it.

As to the bubble: I've been thining it could be a derivatives bubble. I've seen estimates that the derivatives cloud is $1.2 quadrillion or 20X the global GDP. That's not just a bubble; it's a balloon ready to pop.

chuckle8's picture
chuckle8 7 years 48 weeks ago
#9

Howard you would be right on if no one looked at the facts. When the raygun admistration cut the top tax rate for something like 78% to 35%, the top earners paid 2 to 3 times as much in taxes; just ask Rush Limbaugh. It would seem to follow from those facts, that raising a progressive tax on the Rich would give the politicians less pork to play with. I guess politicians having less pork during the reagan admin is why the economy suffered the worse setback since the great depression.

Aliceinwonderland's picture
Aliceinwonderland 7 years 48 weeks ago
#10

Bubble trouble. That's what we've got to look forward to if non-Republicans play hookey on election day.

firebell's picture
firebell 7 years 47 weeks ago
#11

I keep seeing paid messages on the internet: "CIA Insider Warns 2nd Great Depression is Coming". Why would someone pay for them?

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