We have reached the age where we have to resist the urge to give unwanted advice to younger people. Just this morning, a young woman was crossing the street:
‘Hey, none of my business, but that’s a dangerous place to cross. The cars whip around the corner here…and they can’t see you because of the scaffolding.’
‘Thanks,’ came the polite brush-off.
And now we are about to give you, dear reader, some advice. Not a stock tip. Not a trade. Nope… This is advice about crossing the street, circa 2014.
And this advice could be worth a fortune. Especially, if you are under the age of 40. If you’re over 40…you may know someone younger who could use it.
The US stock market is near it’s at all-time high. Unemployment is officially below 7%.
A crazy man sits in the park carrying on a vigorous conversation with nobody. A fat woman begs for spare change on the street:
‘Please, mister, can you spare some change? I’m hungry.’
It has been seven years since the first signs of the financial crisis…and now things are back to normal, right?
The poor are still poor. The rich are still getting richer. And the middle class?
What middle class?
Charles Hugh Smith, of the Of Two Minds blog, reports that many people would like to have a middle-class lifestyle…but only the rich can afford it.
‘The "middle class" has atrophied into the 10% of households just below the top 10%. The truth is painfully obvious: A middle-class lifestyle is unaffordable to all but the top 20%.’
Smith figures there are 10 key criteria for entry into the ‘middle class’.
1. Meaningful health-care insurance (not phantom "insurance," with deductibles that cost thousands of dollars a year that offer no non-catastrophic care at all)
2. Significant equity (25%-50%) in a home
3. An income-expense ratio that allows you to save at least 6% of your income
4. Significant retirement funds
5. The ability to service all your debt and expenses over the medium term, if your spouse becomes unemployed
6. Reliable vehicles for each wage earner
7. You don’t rely on government transfers to maintain your lifestyle
8. You have non-paper, non-real estate assets, such as family heirlooms, precious metals, tools, etc., that you can transfer to the next generation – that is to say "generational wealth"
9. The ability to invest in your kids (education, extracurricular clubs/training, etc.)
10. Leisure time devoted to the maintenance of physical/spiritual/mental fitness
Who can afford all that?
Smith added up the cost of these things. It came to $106,000. Trouble is America’s middle class doesn’t earn that much. Only those in the top 20% of household incomes qualify.
So, what happened to the middle class?
We’ll get to that tomorrow. But first, we’ll leave you with some advice…
Want a middle-class lifestyle…with middle-class finances…and middle-class attitudes?
Forget it. Trying to enter the middle class is like trying to get a job as a galley slave. You get chained to an oar. You sit. You row…until you drop dead.
The middle class, as Smith tells it, is desperate to continue its ‘aspirational consumption financed by debt’. It’s a trap — set for you by the oligarchs and ‘poligarchs’ (people whose votes can be bought cheaply) who control Washington and its major industries.
And if you’re young, you face a lifetime of backache…trying to keep up the pace. You will be forced to pay for the most expensive health care in the world…the most expensive military in the world…and the most expensive education system in the world. All while your real income falls.
These heavy burdens didn’t ‘just happen’. They are the result of dirty dealing by America’s goons and poltroons…its oligarchs and poligarchs…and all the company of modern crony democracy.
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