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.