On June 18, I wrote a comment here titled "Shoots? I Don't See No Stinkin' Shoots." http://nabnyc.blogspot.com/2009/06/shoots-i-dont-see-no-stinkin-shoots.html The politicians keep telling us that the economy is getting better because they see little green shoots sprouting in the earth, so we should all sing and be happy. How stupid do they think we are? Why is it that the national government keeps spending trillions of dollars on wars against other nations, turns billions of dollars over to the criminals on Wall Street, yet has not done one thing to help create jobs for the working people in this country? Not one thing.
Today I see this link to an article titled "U.S. Job Report Suggests That Green Shoots Are Mostly Yellow Weeds," by the esteemed economist Nouriel Roubini, which article starts with this quote: "The June unemployment report suggests that the alleged 'green shoots' are mostly yellow weeds that may eventually turn into brown manure." Well yeah -- that's what I meant to say.
Mr. Roubini's article (link below) states that even if the recession was technically over by the end of this year, we should expect that our country will continue to lose jobs for another year and a half after that. That means we will have more job losses through at least the middle of 2011, for an additional two years, or twenty-four months. At the current rate of job losses of hundreds of thousands of people very single month, how are working people expected to make it?
Keep in mind that even if the job cuts level off two years from now, by the middle of 2011, that still leaves a lot of people unemployed. Most people have lost 40% of their savings and retirement, and many people have or will lose their homes. Further, even if we see job creation beginning in the summer of 2011, the problem is that the jobs that have been lost under the Clinton/Bush outsourcing programs are the good jobs with good wages, medical, dental, and pensions (i.e. manufacturing), and the replacement jobs tend to be in what is called the "service" sector, meaning jobs for servants -- WalMart WageSlaves -- low wage, no benefits, no pensions, no healthcare, no rights.
It is not a solution to our problems to create jobs in retail so that all Americans can work for wages that are not enough to pay the bills. The result is that people have to use their credit cards and pay 25% interest/year on the charges, just to stay afloat. This is an economy in which most people get poorer over time. That's not acceptable.
"US. Job Report Suggests that Green Shoots are Mostly Yellow Weeds."
Nouriel Roubini (7/2/09)
"The June employment report suggests that the alleged ‘green shoots’ are mostly yellow weeds that may eventually turn into brown manure. The employment report shows that conditions in the labor market continue to be extremely weak, with job losses in June of over 460,000. With the current rate of job losses, it is very clear that the unemployment rate could reach 10 percent by later this summer, around August or September, and will be closer to 10.5 percent if not 11 percent by year-end. I expect the unemployment rate is going to peak at around 11 percent at some point in 2010, well above historical standards for even severe recessions."
"It’s clear that even if the recession were to be over anytime soon – and it’s not going to be over before the end of the year – job losses are going to continue for at least another year and a half. Historically, during the last two recessions, job losses continued for at least a year and a half after the recession was over. During the 2001 recession, the recession was over in November 2001, and job losses continued through August 2003 for a cumulative loss of jobs of over 5 million; this time we are already seeing more than 6 million job losses and the recession is not over."
Mr. Roubini also notes that the actual effect on working people is worse than what is shown in the latest Labor Department unemployment reports. In addition to the people who have simply lost their jobs, many other workers have seen their hours and wages cut, so the total amount being paid to labor, working people, in this country, continues to fall in all possible categories -- hourly wages paid, hours of employment available to people with jobs, plus the unemployed. He also notes that the actual unemployment for the country is currently over 16% if you include the "discouraged" and "partially-employed" workers. People who have lost their jobs are staying unemployed for longer periods of time, another indictator of a worsening economic condition for most Americans.
As unemployment increases and more Americans are unable to find work, that also will lead to further defaults by people on their mortgages, car loans, and credit cards.
About 50% of the sales of homes being reported are foreclosures and short-sales (sales for less than the amount of existing mortgage on the home).
Roubini predicts that housing prices will fall by another 40-45% from their current level, which is already about a 27% drop. Assuming a home had a value of $100,000, and has fallen 27%, it would now be worth $73,000; another 45% drop would mean the value of the $100,000 home would drop to about $40,000. Or, in other words, the value of homes from peak to trough will drop by over 60%. The home that sold for $500,000 in 2005 will end up with a fair market value of $200,000 by the time this whole thing plays out. That's not a projection you will read in the Sunday real estate section which is telling everyone that we've hit bottom, so now is the time to buy. And it also is a very sobering prediction when trying to figure out whether we should demand the right of people to stay in the home and keep paying on the loan. If he's right, the people in default should bail out now, because the ship is going down. (Note: he makes another comment in his article that refers to a 45% drop in total, rather than an additional 45% drop on top of the existing 27% drop, so it's not entirely clear which he is predicting.)
And I might add that, although he doesn't mention it, the commercial rental market is due to take a big hit. Small-level professionals (self-employed real estate brokers, mortgage loan brokers, insurance and annuity sales-people, "financial planners" who are really just insurance and annuity sales-people, tax-preparers, attorneys, accountants), small manufacturing (tool and dye shops) which feed the larger manufacturers, and small retail (hair dressers, nail salons, "beauty" spas, beauty-supply, restaurants, small dress shops or shoe stores), collectively constituting most of "downtown" U.S.A., are dropping like flies in addition to the major businesses going into bankruptcy and closing their doors, and all are walking away from leases. When they don't pay the lease, the commercial building owner doesn't pay the mortgage, which means more and bigger foreclosures, more bankruptcies, more unemployment.