As you, dear reader, may have already heard reported elsewhere the Federal Reserve recently released its Survey of Consumer Finances for 2007 - 2010. No doubt you were camped out in front of your closest Fed regional office for weeks in anticipation for the release of the report, but in case you weren't here's the shocking conclusion: US median net worth is down 38.8% since 2007. The median net worth for US households in 2010 fell back to the same level as it was in 1992. That was when this was #1 on the Billboard singles chart.*
18 years of financial gains evaporated as fast as Right Said Fred's popularity.
Not surprisingly, most of that wealth destruction was concentrated in the decline of real estate valuation, which is what most middle-class household wealth is dependent upon. Some more wealth evaporated when the stock market decline in 2008-2009 eviscerated most people's retirement saving, which are now most likely to be in at-risk 401(k) accounts rather than defined-benefit pension plans. And still more wealth was surely wiped away by stagnant wages and high unemployment.
Naturally, there is plenty of blame to spread around, and we can quibble about the how legitimate the wealth gains through real estate appreciation were in the middle part of the last decade. But, I defy anyone to deny that reckless Wall Street speculation - speculation that was bound to go bust - was not a large part of the wealth destruction we have all experienced. So, we should learn from this catastrophic reduction in national prosperity and repair the systems that ran amok, right? We need to reign in the excesses that caused the mess, right?
I think only a madman would differ.
That is why I can't countenance people like Edward Conrad. "Who?" you might ask. He used to be a big shot at a little company called Bain Capital, and he has a new book out arguing that risk taking by investors isn't being rewarded enough.
(I'll let that little gem sink in as you consider what your bonus was last year in relation to the size of bonuses paid out at firms like Goldman Sachs and JP Morgan.)
(Angry yet? No? Ok, Gov. Romney you can put on your jodhpurs and click here now. The rest of my enraged bretheren can continue reading. Don't worry we're almost done.)
Now, I admit I haven't read Mr. Conrad's book, nor do I intend to. I only have so much free time and I'd rather spend quality time with my son than read some overwrought fairy tale of the benefits of speculation. (We've been over my views of finance before, so go read that before you fire up the angry email writing machine.) Besides, we have this interview of Conrad by Jon Stewart on The Daily Show from 6/7/12 where Jon skewered Conrad's less than cogent arguments from the book.
One does not have to do too much sleuthing to connect the dots from Conrad to Romney's economic platform. I for one am hoping that the remaining 60% of my net worth is spared a Romney administration.
[Next time we will discuss Paul Krugman and Ireland...probably. - ed.]
*Number 1 by measuring revulsion to bare midriffs, we're guessing.
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