Let's face it, brothers and sisters: the American economy is in free fall. It's fallen off a precipice and is plummeting towards some bottom below that nobody can see. There's almost a morbid fascination in observing this. If there's any constant refrain among the cognoscenti of the economy, it's that things are going to get worse. Obama is saying and has been saying the same for a while. But nobody is saying how much worse, how long it will last, or--and this is a mite disturbing--what's a good way to stop this. I could take a long detour here into the futility of listening to economists. Nobody in the whole tribe can agree on much of anything. But they traipse across the TV screens every night and day trailing their learned proclamations behind them. In the meantime, the country is going down in flames.Two items: over the last three months, the economy has lost 1.25 million jobs, well over half a million in November.** The official unemployment rate is reported as 6.7 percent. But like so many other government figures, this one is cooked. It doesn't include all those poor bastards out there who've just given up looking for work and are wasting away in their houses--if they still have one--or on the streets. According to the Bureau of Labor Statistics, these people (plus a whole slew of others who are working part-time in just any ole job because they cannot find full-time work) push the real unemployment rate up to 12.5 percent. Now we're talking about a serious number, that, you will recall, is going to get worse.
Second item: concurrent with this great news on the job front is the quarterly report from the Mortgage Bankers Association. Here's the gist of it: "[N]early one in every 10 outstanding mortgages is now either behind schedule on payments or actually in foreclosure. The report marked the worst quarterly showing in the 39 years that the group has kept records. More troubling, prime mortgages given to borrowers with the strongest credit now represent a rising percentage of those mortgages that are delinquent or entering foreclosure proceedings." Got that? The very best, most trustworthy borrowers are defaulting on their loans. We ain't talking all those "deadbeat" borrowers the Republicans want to blame the mortgage crisis on. We're talking solid citizens with good to excellent credit.
Great, huh? And what did the stock market do on Friday confronted with this horrible news? Why, it went up 259 points! This is beyond me, folks. At this rate, traders will be unable to contain their glee if unemployment sky-rockets to 20 or 25 percent. I can hardly wait to see what tomorrow brings.
**Graphic illustration of just how bad this unemployment situation is on this chart from BLS. The economy has shed jobs every single month of 2008. Compare what's happened in 2008 and over the past 3-4 months to the recession of 2001-2002.
5 comments:
One of the problems I am having now is the fact that the Office in charge of such things has recently stated that we have officially now been in recession since December 2007.
So......
even though an actual Recession might last another 6 months, what we have is muddied by:
1. Credit Freeze
2 Destruction of Confidence and Trust.
Combine this with continued loss in housing values, and it's totally impenetrable.
Consider this 1 small aspect of the problem: how to pay for care for your aged parents now, since their $600,000 condo is worth $100,000 IF a buyer could be found.
Future Fun.
Do any of them know what they're doing? I fear not. I think this plummet we're witnessing is just the beginning, and I don't think we're going to be pulling out of this so-called recession in six months. I don't think we're going to see the end in sight even then. Our economy is prone on the ground, with about three spears in its gut. Life support is what's going on now. Doesn't sound like future fun ofr you. Unfortunately, you could be a poster child for all of American in your situation with your parents.
There are a host of problems we have to work through over the next ten years.
Just dealing with the number of institutions now deemed " too big to fail " is going to take our best minds.
I mean, it is quite possible the lion's share of the $ that were to go to Soc Sec and Health Care may end up being diverted to Bank of America, so you are on your own.
I think there will be a momentary upturn by 2010 or so. Not necessarily long lived, but an upturn.
This would be the time to get out, while the getting is good.
Why, thank you, Julissa. I appreciate your nice comment. Please do keep reading, and you might tell others who might be interested in my random ruminations. :)
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