Page 16 - Wealth Effect News Today

To people and does it have the knocks on the economy from that kind of wealth drop? >> there are two things. you say it not liquid but a lot of folks took out home equity loans and did tap into sort of the rising paper value of their homes but more broadly it speaks something what we call the wealth effect that, even if you havent realized the gains on your home or realized these increases in prices, that it makes you feel more wealthy and that can affect the way that you spend money, it can aff...

If you sell a house, you need somewhere else to live, which is going to also cost you money. when we say weve lost 40% of our wealth, is that how it feels to people and does it have the knocks on the economy from that kind of wealth drop? >> there are two things. you say it not liquid but a lot of folks took out home equity loans and did tap into sort of the rising paper value of their homes but more broadly it speaks something what we call the wealth effect that, even if you havent realized the...

126,400 bucks in 2010 it is down to 77,300. look at the family income as well. 49 thousand down to 45 and change there. this is the opposite of what former fed chairman used to call the wealth effect when america felt wealthier in late 90s your 401 k was going up and home values are going up. home values is where much of the wealth is and they have plummeted during the financial crisis. that is the main culprit for the decline. >> what about stocks? >> it would certainly as individual investors ...

Europe and the president mentioned that today. >> and over the sluggish recovery. i think the biggest number of the month is the one that came out a week ago on growth. it was revised down to under two percent. that means in all of last year, 1.7%. the first quarter of this year, 1.9%. you compare it with the reagan recovery on the eve of his re-election, they were growing 6% at that time. when you have a recovery this bad, theres no way you can have unemployment dropping at a reasonable level. ...

That will expire. this has nothing to do. nobody has to do anything. >> theres no chance -- there is no chance of the bush tax cuts expiring. there will be congressional action. theyre working on that now. there will be a deal. >> if you say that, how can -- how do we plan? you just contradicted yourself. >> its not a big deal. >> all right. ok. toby, not a big deal! go for it. >> well, lets look at the stock market for a second. when you have capital gains, in other words, the tax you pay on yo...

>> neil: and the only kids with tear gas-- >> and by the way, wall street people selling those stocks are selling on behalf of average people and mutual funds. >> i dont think that average people would-- >> and goldman sachs. >> the disappoint over the fix leaving. >> bottom line, ben bernanke whats a greater wealth effect. interest rates at zero. >> he agrees with you when he says that the response was childish. >> its not childish, this is rational. >> and interest rates are going up. >> and y...

Economy has to grow to keep that number going down. the question is will we be able to continue that. charles payne is a fox business network anchor. hes joining us now. charles, ben bernanke has to be careful about what he has to say. what do you make of the comments, is it a vote of confidence? >> reporter: youre right when you talk about ben bernanke being careful thats the key. hes walking a fine line. they want to take credit for all the things theyve done, how creative theyve been. by the ...

Consumers, think inflation is coming down the road, they will change their behavior today, that actually create more inflation. >> very good. >> like raising prices in the pipeline to ensure that their margins dont get squeezed because prices go up in the future. we could be in the beginning of a very dangerous cycle. >> think about why hes doing what hes doing. >> who? >> ben bernanke, i mean, this is the reason, i mean, all of this comes back to 0% interest rates and worrying about the banking...

was 14,164, but we have come a long way, baby. a long way from the bottom, like we have doubled. that is pretty incredible. and also incredible, the surge since president obama took office. the dow is up 63% since inauguration day. that ranks him fifth. after 1,153 days in office, fdr, calvin coolidge, dwiez eisenhower, and bill clinton had b better records. and this is important, because a lot of the americans are invested in the stock market. according to gallop, 54% of americans own...

long way, baby. a long way from the bottom, like we have doubled. that is pretty incredible. and also incredible, the surge since president obama took office. the dow is up 63% since inauguration day. that ranks him fifth. after 1,153 days in office, fdr, calvin coolidge, dwiez eisenhower, and bill clinton had ben better records. and this is important, because a lot of the americans are invested in the stock market. according to gallop, 54% of americans own stock through the pensions a...