First and second Americans
For a while, lower interest rates made it possible for the Second America to cope with rising housing costs and all the rest by making cheap the debt needed to stay afloat. Over the last several years, this second America has used the equity from a steroid-injected housing market to finance its survival.
The first America – which represents a fraction of the top 1% in income -- meanwhile has been feasting at a banquet table of tax cuts and corporate welfare that it has been dreaming about since the FDR took away the punch bowl.
The Cohan Letter's industry analysis section shows that private equity firms and M&A bankers have secured their place in the wealthy firmament of economic superstars.
Regrettably, there has been no trickle down effect. Unlike the 1990s which enriched venture capitalists, startup company employees and executives, and the average shareholder; this decade has impoverished the average shareholder.
Since January 2001, the S&P 500 has lost 4% of its value. And the future for the majority of Second Americans will become worse as interest rates rise along with prices even as housing values tumble. Meanwhile with the $363 million average earnings of the top 100 hedge fund managers, the future for the First Americans continues to burn brightly.