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Winners and Losers Five Years After the Financial Crisis

Saturday, September 21st, 2013 Leave a comment Go to comments

So who benefited and suffered the most during the five years after the Financial Crisis? The LA Times took a deeper look into the question and came up with the below list.

Winners:

  • Banks (Recorded the biggest industry profit in history in the second quarter of this year.)
  • Corporate America (Corporate earnings reached an annualized rate of $2.1 trillion in the second quarter, an all-time high and more than double the rate at the end of 2008.)
  • The Super-Rich (The top 10% of U.S. earners captured 50.4% of total income in 2012, a level higher than any other year since 1917.)
  • Index-Investing Strategies (Shifting to index investing essentially is deciding that if you can’t beat ’em, join ’em. Evidence: Vanguard Group, the dominant index-fund company, has been the standout winner of fund companies since the crash. The firm’s total stock and bond fund assets have rocketed to $2 trillion from $1.1 trillion at the end of 2007.)

Losers:

  • Savers (In the mid-2000s, savers in banks were routinely earning 4% or more on one-year bank certificates of deposit, or $2,000 in annual interest on a $50,000 nest egg. The average rate now: 0.23%. The same $50,000 nest egg earns just $115 a year in interest at that rate.)
  • Low-Skilled Workers (The 2008 crash exposed a deepening predicament faced by low-skilled and unskilled workers everywhere: A slow-growing world economy means many companies can’t justify hiring. At the same time, automation continues to replace human labor.)
  • Foreclosed and Underwater Homeowners (The bursting of the housing bubble has cost 4.5 million families their homes via foreclosure over the last five years. In many hard-hit communities the total cost has been incalculable: lives disrupted, neighborhoods degraded, tax revenue slashed, credit ruined. The number of homes with negative equity totaled 7.1 million at the end of June, or 14.5% of all homes with mortgages.)
  • Stock Exchanges (U.S. stock trading volume has shrunk dramatically since 2008, in part as many small investors have abandoned equities. That has accelerated the pace of mergers in the trading business, as exchanges partner up with stronger players or consolidate to grab more share of a disappearing market.)

For a more in depth analysis of the winners and losers noted above, read the LA Times article in its entirety.

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