Is The Crisis Easing?
Recently there have been some economic statistics that have given a bit of hope that, ever so gradually, the crisis is beginning to ease. Let's hope, but to be quite honest, we have a long way to go. At times during the Great Depression conditions seemed to be improving, only to have the economy tumble even further. Currently, some parts of the economy do seem to at least be stabilizing, so I'm not saying things are going to get a lot worse, but there are still very troubling matters that could send the economy into another tailspin.
First, a high number of job losses are already in the pipeline. When we've heard or read that Company XYZ is cutting 5000 jobs, seldom does that mean that those 5000 jobs were eliminated that very same day, but rather those jobs will be eliminated over a given period of time, usually measured in months. So unemployment is going to get worse, at least in the next few months. Hopefully the job losses will begin to come down, but don't expect employers to come knocking at your door to fill vacant positions any time soon.
Then we have the banking situation. Right now it does seem to be stabilizing, and I hope that is truly the case, but there is an escalating crisis in commercial real estate, as many office buildings and shopping malls have high vacancy rates, or tenants behind on rent, and these properties are having increasing difficulty meeting their payments, aka, mortgages. Home foreclosures are still rising (up 24% in the first three months of this year compared to the same period last year), and with so many job losses, I can't imagine the numbers are suddenly going to start getting a lot better. As if this isn't enough, credit card and auto loan defaults and late payments have significantly increased. Again, it doesn't take Einstein to figure out that with more unemployment, there will be even higher default rates. The question is, with many of the banks doing a bit better, can they take the hit of more credit losses?
We, the taxpayers, have put billions (actually TRILLIONS have been pledged) into propping up banks, insurance companies, and automakers. I know we don't like it, and we shouldn't. BUT we still have to consider the alternative; that is, to have let all of these companies fail. Let me tell you, if you think things are bad now, how bad do you think it would be if all of these companies had gone under? We think the current 8.5% unemployment is bad, but just pick a number for what it might be otherwise: 12%, 15%, 20%??? Believe me, 20% is NOT out of question. Not only would millions of people have lost their jobs from these businesses, but the effect on the overall psyche of the country (and the WORLD) would have been so traumatizing that even 20% unemployment may be a low number.*** If you feel that your job has been shaky now, chances are, you would be another statistic in the unemployment number by now. Again folks, this is what they, the merchants of greed, got us into; virtually a "no win" situation. And don't count the bastards out yet, as I'm absolutely sure they're just waiting to get the price of oil and gasoline back up as soon as possible. Will we let them get away with it? (A word history is below)
*** Remember, the Crash of 1929 and the resulting downturn (including bank failures), scared the living hell out of people, and spending by businesses and consumers plunged by incredible amounts. Roosevelt's New Deal spent what were considered huge amounts for those days, but even those expenditures couldn't pull the economy totally out of the Depression. The truly huge amounts we spent on World War Two finally got the country out of the doldrums.
Word History:
Stark-This goes back to the Indo European root word "ster," which meant "rigid, stiff." The Old Germanic offshoot was "starkaz," which had much the same meaning, but also with the added notion that if something was rigid, it was "strong." In Old English it was "stearc." Close relatives of English, Dutch and German, have "sterk" and "stark," respectively, both meaning "strong." North Germanic also uses the word, as for instance, Norwegian has "sterk," meaning "strong." The notion of "stark=strong" gave rise to its use as an intensifier as "total, complete," by the 1400s in English, and thus to this day we say, "stark naked" ("strongly" naked, if you will; thus, "totally, completely"). This term further gave English the idea of "barren," as in "the stark countryside."
First, a high number of job losses are already in the pipeline. When we've heard or read that Company XYZ is cutting 5000 jobs, seldom does that mean that those 5000 jobs were eliminated that very same day, but rather those jobs will be eliminated over a given period of time, usually measured in months. So unemployment is going to get worse, at least in the next few months. Hopefully the job losses will begin to come down, but don't expect employers to come knocking at your door to fill vacant positions any time soon.
Then we have the banking situation. Right now it does seem to be stabilizing, and I hope that is truly the case, but there is an escalating crisis in commercial real estate, as many office buildings and shopping malls have high vacancy rates, or tenants behind on rent, and these properties are having increasing difficulty meeting their payments, aka, mortgages. Home foreclosures are still rising (up 24% in the first three months of this year compared to the same period last year), and with so many job losses, I can't imagine the numbers are suddenly going to start getting a lot better. As if this isn't enough, credit card and auto loan defaults and late payments have significantly increased. Again, it doesn't take Einstein to figure out that with more unemployment, there will be even higher default rates. The question is, with many of the banks doing a bit better, can they take the hit of more credit losses?
We, the taxpayers, have put billions (actually TRILLIONS have been pledged) into propping up banks, insurance companies, and automakers. I know we don't like it, and we shouldn't. BUT we still have to consider the alternative; that is, to have let all of these companies fail. Let me tell you, if you think things are bad now, how bad do you think it would be if all of these companies had gone under? We think the current 8.5% unemployment is bad, but just pick a number for what it might be otherwise: 12%, 15%, 20%??? Believe me, 20% is NOT out of question. Not only would millions of people have lost their jobs from these businesses, but the effect on the overall psyche of the country (and the WORLD) would have been so traumatizing that even 20% unemployment may be a low number.*** If you feel that your job has been shaky now, chances are, you would be another statistic in the unemployment number by now. Again folks, this is what they, the merchants of greed, got us into; virtually a "no win" situation. And don't count the bastards out yet, as I'm absolutely sure they're just waiting to get the price of oil and gasoline back up as soon as possible. Will we let them get away with it? (A word history is below)
*** Remember, the Crash of 1929 and the resulting downturn (including bank failures), scared the living hell out of people, and spending by businesses and consumers plunged by incredible amounts. Roosevelt's New Deal spent what were considered huge amounts for those days, but even those expenditures couldn't pull the economy totally out of the Depression. The truly huge amounts we spent on World War Two finally got the country out of the doldrums.
Word History:
Stark-This goes back to the Indo European root word "ster," which meant "rigid, stiff." The Old Germanic offshoot was "starkaz," which had much the same meaning, but also with the added notion that if something was rigid, it was "strong." In Old English it was "stearc." Close relatives of English, Dutch and German, have "sterk" and "stark," respectively, both meaning "strong." North Germanic also uses the word, as for instance, Norwegian has "sterk," meaning "strong." The notion of "stark=strong" gave rise to its use as an intensifier as "total, complete," by the 1400s in English, and thus to this day we say, "stark naked" ("strongly" naked, if you will; thus, "totally, completely"). This term further gave English the idea of "barren," as in "the stark countryside."
Labels: bailouts, banks, economy, English, etymology, Germanic languages, unemployment benefits
posted by Randy at 11:57 AM
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