Friday, September 05, 2008

Great Depression

Besides the unemployment stats this morning which show the jobless figure at 6.1 percent, the rate of disappearance of imaginary capital from banks and mortgage contract holders has set a new record (again).

Over nine percent of American mortgage holders in the U.S. are either seriously behind in their payments or in foreclosure.

The most recent wave of foreclosures has moved beyond the subprimes, which were the first to default, and is now harvesting a large crop of adjustable rate mortgages (ARM's). When the payment "resets" and balloons is when the default occurs, of course.

So the big shitpile got a lot bigger this summer. Now we're looking at a growing army of unemployed, most of whom have no prospects for employment any time soon because the jobs market is so tight, looking at an expanding big shitpile.

Factor in the prices of gas and food and we've got an explosive situation.

I got news for the optimists and deniers among us: these are hard numbers, and this is not "partly psychological."

1 comment:

Joe said...

The classical economic approach is to save for lean times. Bushco lit the candle at both ends.