The Ten Most Outrageous Economic Calamities of 2012
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It was another year of Wall Street treachery. Those who took down our economy still have not been held accountable. Instead, Wall Street successfully lured the political establishment into a phony fiscal cliff/austerity debate. So instead of creating programs to put millions of Americans back to work, Washington is debating how much more to take away from the poor and the middleclass. Let's take a closer look at the most disastrous economic events from 2012.
Here's our countdown:
#10: The Romney Tax Returns:
Thank you Mitt Romney for alerting the public to what we already suspected: the super-rich pay lower rates than the rest of us (and yet, still have the nerve to complain that the government has too much debt!). Mitt's tax returns showed how he could reduce his tax bite on $21 million of income in 2010 to only 13.9 percent by getting most of his income in the form of capital gains, and by stashing money overseas. His 2011 returns would have been even lower, but he realized he better up it a bit by volunteering to pay taxes on his sons' $100 million trust funds. The net result was still a paltry 14.1 percent rate. It was also blatantly clear that had he not been running for president, he could stashed even more money in the Cayman Islands to bring his rates down to nearly zero. As the chart below shows, he's not alone.
#9. Middle-Class Wealth declines by 35 percent
On July 18, 2012, the U.S. Bureau of the Census made it official: The middle-class is getting poorer. The median family -- that family exactly at the mid-point of the wealth ladder --- saw its net worth collapse. (Net worth is all assets minus all liabilities.) In 2005, the median family's wealth was valued at $102,844 (in inflation adjusted dollars.) By 2010, the latest Census figures showed a drop of 35 percent to $66,740.
#8. The Fortune 400 increase their wealth by $200 Billion:
Meanwhile, the super-rich are flying even higher. This fall, Forbes Magazine was proud to report that the richest 400 Americans increased their wealth by a whopping $200,000,000,000 (that's $200 billion), pumping up their collective wealth from $1,500,000,000,000 to $1,700,000,000,000 ($1.5 trillion to $1.7 trillion.)
How do we make sense of such obscene numbers?
- On average, the richest 400 Americans saw their wealth go up by an astounding $500 million each in only one year -- a bad year, no less, for the economy.
- Just this one year's increase in wealth for the richest 400 is enough to hire approximately 5 million entry level teachers!
- All totaled, the 400 richest Americans have the same amount of wealth as approximately 25.5 million middle class families in the center of the wealth distribution.
- This is the new math of plutocracy: 400 super-rich = 25.5 million middle class.
#7. Bankers Rob Bank, but None Arrested:
The London Inter-bank Offered Rate (Libor) is the rate that the largest banks doing business in London (which includes all the big American banks) charge each other for overnight loans. It sets the basic interest rate on many adjustable loans associated with credit cards, adjustable mortgages and other commercial loans. It's the most important interest rate in the world.
This year we learned the rate was being manipulated for fun and profit by the big banks who set it each day. By manipulating the Libor rates, the bankers could cash in on bets they were making on financial instruments that were sensitive to those rates. If they needed the rates to nudge up to win their bets, up it went. If the bet was on securities going down with Libor rates, down they would go. That's exactly like a bookie fixing the biggest horse races in the world after it starts so that he can win his bets.