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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 haven't 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 affect the way that maybe you go out to dinner more often, go shop at the mall more often. consumer sp...

If you sell a house, you need somewhere else to live, which is going to also cost you money. when we say we've 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 haven't realized the gains on your home or realized these increases in prices, that it makes you feel more wealthy and...

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 did. we know that from following the mutual fund data. they pulled their money out at the exact wron...

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, there's no way you can have unemployment dropping at a reasonable level. and i think -- and there's a second opinion. you mentioned the stock market. people always have a s...

That will expire. this has nothing to do. nobody has to do anything. >> there's no chance -- there is no chance of the bush tax cuts expiring. there will be congressional action. they're working on that now. there will be a deal. >> if you say that, how can -- how do we plan? you just contradicted yourself. >> it's not a big deal. >> all right. ok. toby, not a big deal! go for it. >> well, let's look at the stock market for a second. when you have capital gains, in other words, the tax you pay on your profit, go up 45% then let's talk about the stock market. the wealth effect has been very str...