The main problem is property. It is too expensive. It has been pushed by the central bank pushing low interest rates. The idea is people feel wealthy if the house price is high and consume more. It is an illusion and it gives the home occupiers an advantage. Cheap credit and huge spending power. Plus they can chose to buy at low prices when they occur. It is mainly the central bank believe me.
The "wealth effect" was the main driver in the economy throughout the 2000's. As you mentioned, after the tech bubble burst, they pushed interest rates lower so housing increases gave people the confidence to spend more and it worked....until it didn't any more.
Its amazing how high prices are on goods and services today, BUBBLE ben bernanke is still ignoring the fact that prices are surging, just like he ignored the housing bubble he is ignoring the fact now that there is inflation running through the system. Prices are so out of control its not even a joke.... The cost of living is too high and a lot of that has to do with a few things, 1. The propping up of the economy... by BUBBLE ben bernanke inflating the economy with worthless trillions this has created higher commodity prices which has led to higher prices of goods and services. 2. Commodity Speculators, they drive up the cost of commodity prices by keeping the middle man out by not taking possession of the actual physical commodity, driving the price higher between the seller and the buyer. 3. QE 1 QE 2 and soon to be QE 3 4. Real estate prices being propped higher, this is by creating programs and offering incentives to first time house buyers over the last 3 years, also the 30 yr fixed at around 4% has brought more buyers in than usual. I still think housing prices are way over priced and need to fall a good 40-50%.
Exactly, its been pushed higher by keeping rates low, they think or are hoping that they can push housing prices higher once again so that people can once again start borrowing against their houses like big fat piggy banks....thats the only way they know how to fix this crisis, meanwhile what they dont comprehend is that its not going to work as easy as they think it is, BUBBLE ben bernanke is only creating more problems than fixes for this economy moving forward.
Well for one thing, the rush is on to raise min wage. This is going to pass, somehow the share holders are going to get the shaft.. I'm not advocating for corps to pay a higher wage just because they are profitable on some level. I think their is a disconnect between cost/benefit at todays levels of taxes, fee, etc.vs average wages.
Current market value of McDonald's is about $100 billion. If they cut their operating earnings in half and gave it to the employees as increased wages, stock price would also fall (at least) by half. Including the effects of operating leverage (since a big chunk of permanent wage increases are fixed cost), it would probably be more, but let's say stock price falls by 50%. At least $50 billion of shareholder equity would be wiped out in a heartbeat. Shareholder lawsuit!
And it is not the peoples responsibilty to bail them out when they stiff the shareholder in favor of bonuses.