Who's Hit Worse from This Recession: Rich or Poor?

Apropos Floyd Norris today, I've been wondering whether this is one of those unusual recessions where the rich get hit worse than the poor. It's certainly true that limited partners with leverage and margin and hedge funds and whatnot have been hit hard, financially. It's also true that if you have very little in the way of assets or liabilities, but you do have a job, then you're probably liking the way in which many common goods and services are becoming significantly cheaper -- especially gasoline.

What's more, as any good student of the hedonic treadmill understands, going from rich to significantly less rich is in many ways worse than starting poor and staying that way. But still, it's really hard to gin up much in the way of sympathy for the multi-millionaires-turned-mere-millionaires. And you only need to take one look at a place like Detroit to see where the real damage is being felt most acutely. It's not hard to choose between bailing out Detroit and bailing out Greenwich.

Comments

[Nikola:]

Felix, you forget to consider that there are different kinds of rich people. Those who actually built a business, often from scratch, and those who became rich making obscene salaries and bonuses peddling ponzi schemes derivatives.

I suspect that rich people who EARNED their money are humbler and are willing to live on "bare millions." The spoiled Wall St. brats who complain life on $500K cash is bitter... couldn't care less about them.

So I'd say the poor or middle class got hit more. Lots of them unemployed, late on mortgage payments, etc.

Feb 20 03:34 AM

[Al-USA:]

Well, lets see, at last count, almost 7 million Americans are on unemployment. This is the most since records have been kept.

And don't forget that only one third of people who apply for unemployment get benefits. The rest, well, they will just have to live off their "meager" savings, until they find a sympathetic capitalist elite that will give them a job, having beaten out a few 1000 other job seekers, at minimum wage no doubt. Those will be the lucky ones.

Most will not find a another job, even at minimum wage, so, if famale, and young enough, maybe prostitution will do. For the males, especially the young, those will provide the reserve manpower to power up the people's militias when it all goes to "hell", as it almost did in 1933 but, regrettably, in my opinion, it did not.

Imagine if it had though, the people could have rebuild the Republic to avoid this happening ever again... That is, get rid of the Fed, and get rid of the fractional reserve monetary system. More information below:

"The Fed's War on the Middle Class"
mises.org/story/2983

Feb 20 03:45 AM

[Moon Kil Woong:]

The answer is simple... the middle class or what's left of it. The poor live on subsistence at all times so it's hard to get worse unless your health deteriorates or you die. The rich may curb spending but largely their lifestyle doesn't have to change much nor their standard of living.

If you talk who looses more asset value, the rich always do since the poor have almost none. But once again I turn to the plight of the middle class who have been shouldering the needs of the poor and the excesses of the filthy rich who didn't earn it (inheritance, crookery, etc.) year in and year out for just about forever (All rich are not the same. The self made rich who worked their ass off or invented something useful are esteemed in my book).

Feb 20 03:54 AM

[Moon Kil Woong:]

"What's more, as any good student of the hedonic treadmill understands, going from rich to significantly less rich is in many ways worse than starting poor and staying that way."

I would doubt the author has been poor if you can honestly write and believe this. Sure being poor you may appreciate the small things in life better and enjoy playing in the dirt, but you also must contend with trying to stay dry, warm, and well fed.

Feb 20 04:01 AM

[Steven Hansen:]

any poor or middle class person who makes it through this recession and still has a job is a winner. the rich are rich.

the losers are unemployed.

Feb 20 04:15 AM

[morph366:]

One thing is for sure our culture and the credibility of our credit system has been much impoverished by the ongoing debacles

Feb 20 04:57 AM

[lonie:]

How many bums you see smiling ,walking down the road? How many millionairs you see not smiling?

Feb 20 08:47 AM

[John Slater:]

The issue is not rich and poor, it's whether there will be enough capital to drive the economy going forward. The amount of wealth destruction we have seen in the past year is going to have a profound effect on the economy's ability to grow coming out of the dprecession.

Feb 20 09:40 AM

[notsosmart:]

wealth destruction is meaningless if it was phony to begin with. crap paper rated AAA & sold all over the world based on a housing bubble is not real wealth. borrowing & spending against against non existing value is the formula for this disaster.i never took a heloc.my home is the roof over my head. not an atm machine.paid my 30 yr motr. in 20 yrs.sadly,many learning the hard way.

Feb 20 10:12 AM

[henarl:]

The very rich will always be very rich. The very poor will always be very poor. Those who are in between these extremes will be hurt the most.

Feb 20 12:13 PM

[Larrysyr:]

Money doesn't always buy happiness.

The person with $10 million is probably not much happier than the person with $5 million.

But the person with enough to feed, clothe, educate, and house a family is way happier than the person without.

I haven't lost my job. I know people who have. I'm way happier than they are, regardless of who's technically "richer."

Feb 20 12:24 PM

[dinosaur br...:]

Just consider the plight of the poor professional athlete who had the terrible misfortune to turn free agent in this muck. Could have made $20M/yr if it had been a year earlier. Now, they'll be lucky to get half that much if they're coming off a good year. Now that could just bring a tear to the eye's of a fan who used to go watch a game now and then back when he had a job!

Feb 20 10:29 PM

[Ms Nana M.:]

"Nobody suffers like the poor".
Surviving on welfare to feed kids will never be easy, there are so many opportunities poor people cannot provide for their families. It's not just the basic lower hierarchy of needs like shelter and food and safety, its lack of status, lack of education and lack of hope. It's the stress and physical/mental illness that comes with being poor, just trying to keep that humble roof over ones head, heating and food in your belly.

Wealthy/middle class can still sell their assets, maintain a lifestyle, pawn their gold jewelery, put petrol in their car (because they probably still own a car). Maybe wealthy people may have to cut back on extra curricular activities for their children but these are things poor children never had. If things go terribly bad they may lose their home, well then they are in the same situation as us poor folks and only then they can say who had it easier. Middle class will mainly experience shame and humiliation not being able to keep up withe Jones's anymore, not being able to keeping up appearances.

Poor people have pride also, nobody likes living in poverty or watching their children miss out.
But definately its the ruling/upper classes which do the most damage, how can they NOT be ashamed of their own avarice especially when so many in this world are starving and so many are doing it tough. These people are vermin in my eyes, can't stand reading about their wealth, glamor, fortune and ludicrous lifestyles. Unless they actually "worked" for their pennies well then they are of no real value and contribute nothing to the benefit of society but are an ultimate tease of what the majority of us will never ever have.

For a poor person a middle class lifestyle is ideal and even then probably a bit excess in comparison to what we actually "need" compared to what we actual "want".
Millions in the bank? Thousands in the bank? I'd settle for $1 at least I'd know i haven't over drafted my account and been fined for it.
Middle class still have useful tools, contacts and skills even when they slip down the wealth ladder. The only good thing about being poor is that there's nowhere to go but up (so long you keep your sanity that is).

ThAt's my 2 cents worth, about all i can afford.

Mar 07 10:12 AM