This post is part of our feature on Money Losers of 2008. See all 20.

If there could be a more cruel joke played on the downtrodden American middle class this year, I don't know what it could be. Battered by high gas prices and a punishing mortgage climate in which millions lost their homes, at the end of the year, many were laid off. Desperate in a period of high unemployment, millions are turning to their 401(k) plan for emergency funds. And that's where the true emergency is.

My 401(k) lost about 40% of its value in only a few terrible months this summer and fall. I didn't have much to lose; I'm only a drop in a trillion-dollar bucket, with losses in the NYSE alone at $8.6 trillion for the year. In January 2008, the NYSE opened at 9,647 points, a value of $19.7 trillion. By mid-December, the NYSE was hovering around 5,500 points, a value of $11.1 trillion, an enormous 43.7% decline.

Taking an early distribution from my 401(k) due to a period of depressed income (I'm now a freelance writer and not an "employee," a title so imbued with special status in our society), I had to laugh at the automatic calculator that the Fidelity Net Benefits system makes you undergo in order to request a distribution, showing me how much I would be losing from my retirement income. If only someone could have made me go through this little exercise when I was responsibly socking away cash in stock index funds -- "this is how much retirement money you can lose if you trust in the American economy!" -- perhaps I'd have saved the time to log into Fidelity and just stuck the money in savings instead. I had to laugh -- so I didn't cry.

As the ever-increasing stench of socialism wafts from the halls of our legislative branch, one must take pause to wonder exactly how we got to where we are today economically. Yes, I know that there has been a lot of pausing and wondering going on lately. What ticks me off is that it seems that very few of those who are pausing and wondering seem to be able to form the words to express the reality of what they have determined to be true, which is: that the single most significant root cause for today's economic dilemma is the erosion of income for the American middle class private sector.

For the purposes of this piece, I'll state that I consider the "middle class" to be those workers who earn between $14,000 and $125,000 per year. That covers just about every worker from entry level manufacturing to first tier management. We create the bulk of real wages that move throughout this country. We also pay virtually all of the taxes in this country. Never mind that corporations pay huge sums in corporate taxes every year, because the fact of the matter is, they collect those sums from us at the consumer level. Yes, we pay those corporate tax bills, and we know it.

What will it take to break the downward cycle for the U.S. stock market and its economy? Get back to our roots as a country that lives within its means.

The source of the problem is that we have gotten away from the idea of paying only for things we can afford. To close that affordability gap that results from lower income and higher prices, we have borrowed money -- $9.3 trillion in federal debt, a $410 billion federal budget deficit, and $2.5 trillion in consumer borrowing -- which has caused other countries to view the dollar as a distress currency. It's lost 72% of its value since January 2001 -- when it traded at 92 cents to the euro.

Having spent the last two weeks in Europe, that weak currency hurts -- everything seems to be about 50% more expensive there than it is here. Gasoline there is far more expensive than it is in the U.S. -- roughly $9.60 a gallon compared to $4.25 here. And the reason that our stock market is dropping while oil rises is a result of deliberate government policies designed to weaken the dollar and strengthen oil.

Rice, a staple food for about 3 billion people, is becoming a precious commodity as a result of rising demand -- a reality that's prompting some agriculture watchers to ask whether global grain producers will be able to keep the world adequately supplied amid solid emerging market economic growth.

China, Egypt, Vietnam, and India, which represent about one-third of global rice exports, curbed sales this year, and Indonesia did so as well, Bloomberg News reported Monday. Grain and food demand is increasing at above-trend rates due to solid economic growth in emerging markets. These regions are experiencing expanding middle classes -- a factor that historically has almost always led to rising per capita food consumption in the country where the growth occurred.

As a result, the price of rice and other commodities has soared -- rice hit $21 per 100 pounds on Monday, Bloomberg News reported -- and governments may face increased social unrest, given the pivotal role rice plays in many developing nations.

In an interview with CNBC's Maria Bartiromo, Presidential candidate Barack Obama started to spell out his economic plan. Obama said that he would raise capital gains taxes, "Well, you know, I haven't given a firm number. Here's my belief, that we can't go back to some of the, you know, confiscatory rates that existed in the past that distorted sound economics. And I certainly would not go above what existed under Bill Clinton, which was the 28 percent. I would--and my guess would be it would be significantly lower than that. I think that we can have a capital gains rate that is higher than 15 percent."

Just because the Senator got rich from his book doesn't mean that the rest of us should be punished for trying to grow our savings and our investments. Why should the middle-class have to pay higher capital gains tax so that Obama can bailout irresponsible home buyers?

Hasn't he learned economics? It's pretty clear that if you punish and make it harder for wealth creation and investment, that there won't be as much, and as a result the economy will get much worse.

Sources close to CNN broadcast journalist/commentator Lou Dobbs said he is seriously considering a run for the U.S. presidency in 2008, The Wall Street Journal reported.

Dobbs, who formerly hosted CNN's MoneyLine business news show and currently hosts CNN's Lou Dobbs Tonight has seen both his ratings and his name recognition rise after his work's focus turned away from news reporting and anchoring and toward political and economic commentary.

Dobbs, an independent, displays an ideology and a political world view that many have characterized as a modified hybrid of Ralph Nader and Pat Buchanan -- i.e. populism combined with strong views against free trade (or current trade frameworks) and against illegal immigration.

Dobbs is a frequent critic of both the Democratic and Republican parties, which he argues don't represent the interests of the typical person or the middle class. His show's website describes him as "an independent populist and the leading media advocate for working men and women, their families, our middle class and the American way of life."

Political Analysis: Unless there's a tidal wave of discontent in the American electorate not tallied by pollsters, Dobbs, as a third-party candidate or as an Independent, has virtually no chance of being elected president of the United States. Although his name recognition is rising and he has a positive public image, it's highly unlikely Dobbs could assemble the campaign staff and money required to compete effectively against Democratic and Republican parties' nominees.

However, this is not to say that Dobbs could not broaden the discourse, i.e. "force the discussion of less-publicized issues" during a debate. Dobbs could accomplish this, but it must be emphasized that making points in a debate is a much easier task than receiving enough votes to win the electoral college vote for U.S. president.

When T.S. Eliot began The Waste Land noting that "April is the cruelest month," the American poet wasn't talking about tax season. But anyone who has ever been audited might adopt the phrase to suit their circumstances . . . and the month is rapidly becoming crueler and crueler each passing year.

According to an article in today's New York Times, the Internal Revenue Service has become increasingly more likely to audit middle-class Americans. In fact, since 2000, audits have nearly tripled among those taxpaying Americans who earn between $25,000 and $100,000 per year. During the past six years, middle-class households (who make up nearly half of all taxpayers) have seen their odds of an audit rise from 1 in 377 to 1 in 140.

Kevin Brown, the I.R.S. deputy commissioner, said the agency's audit practices previously paid too little attention to the middle class, focusing instead on those making $1 million or more. "We try to run a balanced audit program," he now confirms. Even with the ramped-up audits on the nation's middle class, those in the highest tax bracket remain more like to be audited. Taxpayers with income above $100,000 have a 1 in 59 chance of being audited; those fortunate enough to make $1 million or more enjoy the misfortune of a 1-in-16 chance of an audit. Finally, those making below $25,000 face only a 1 in 94 chance of enduring an audit.

If you are among the unlucky middle-class households to be audited, and if evidence of errors are found in your documents, the average penalty is about $4,100.

Beth Gaston Moon is an analyst at Schaeffer's Investment Research.