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Archive for August 26th, 2010

This Economy Is Ripping The Dignity Of Millions Of Unemployed Americans To Shreds

 

If you can still put a roof over your head and food on the table for your family, you should consider yourself to be very fortunate.  There are millions of Americans out there right now that are really, really suffering.  The cold, hard reality of it is that there aren’t even close to enough jobs out there for everyone right now.  It is almost as if we are all caught in a really bizarre game of musical chairs where the losers get stripped of their tickets to the middle class.  What this horrible economy is doing to the dignity of millions of middle class Americans is incredibly saddening.  There are a lot of very highly educated and very hard working Americans who cannot seem to get jobs no matter what they do and now find themselves doing whatever they can just to survive.  It can be really hard to keep your dignity when you played by all the rules and you worked as hard as you could all your life and now you find yourself a half step away from being homeless.  Those of us who are still doing okay should never look down on those who are struggling in this economy, because the truth is that any of us could be next.   

If you really want to read some horror stories about what long-term unemployment is doing to some people in America, you should go spend an hour or two over at Unemployed-Friends some time.  It is a great forum with a lot of great resources for the unemployed, but it also contains dozens and dozens and dozens of heartbreaking stories from middle class Americans who have had their lives shattered by this economic downturn.      

The following is a typical story on Unemployed-Friends.  It is from a 48 year old Air Force veteran who has lost everything and is now sleeping in his vehicle.  It turns out that Scott48′s job was shipped off to India and now he has been out of work for over two years….

“I am a 48 year old USAF Vet. I got my house in 1996 with the help of the VA. In 2009 the company I worked for went out of buisness(gone to India) I then became a 99er. I notified Wells Fargo that I lost my job and they said they would work with me, the next mortgage statement I got they conveniently increased my mortgage! With what I got from UE was enough for the house but I had to cut out the luxury of food, gas, utillities, insurance, entertainment and alcohol. That was it for me, so the forecloser ball was in motion. I had to give my dog to my cousin so he would get fed, I took everything I owened to the auction( execpt tools, clothes, pictures, tech manuals and my Saxophone) and sold it. I went to a half-way house the VA recomended for a week and it was joke, so my cousin said I could stay with her. After 4 months she diecided that I wasnt looking hard enough and kicked me out, and Ive applied for everything except selling myself. This summer I was staying in an abandoned house due to forecloser and the real estate company has now put it on the market, and I am now on the street sleeping in my vehicle or a friend here and there. Keeping clean is going to be a challenge cuz the Flying J truck stops charge $10 for a shower, rip-off. What a country!”

The truth is that this economy is driving many Americans to the brink of desperation.  Even recent college graduates are becoming desperate enough to actually consider suicide.  The following story is from an Unemployed-Friends user known as 08pacollegegrad….

“I could just take any job like working at fast food places, but I hear people who try can’t even get hired there. I went to Wendy’s for lunch the other day and I thought of picking up an application…but the slot where they keep the applications was completely empty. That should say it all. Plus, I feel like if I take just any job…I will be set back further and never be able to gain experience in my chosen fields.

I follow up on job applications, but employers ignore me for the most part when I try to contact them. I sent five follow up e-mails last week and got no responses. I contacted an employer expressing my interest in working for them, but all they gave me is the link to their online application system that I have never gotten a job from.

I am thinking of applying for more internships (I have already done two), but I don’t want employers to think why I am applying for an internship when I should have had a full fledged job by now.

I have almost killed myself over my situaion and am taking anti-depressants right now. I see a psychiatrist every 4-6 weeks, but I still have days where I feel so empty. I am sick of sitting at home searching for jobs and praying for a response that never comes.”

Many Americans spend day after day after day looking for a job that never comes.  The sense of hopelessness that can build after doing this for a few years is almost indescribable.  The following is another incredibly sad story from an Unemployed-Friends user known as feuxdejoie….

“I lost my job in June 2008, my husband was working but sentenced to prison for 4 years, for DUI, no accidents or injuries. I had been using my unemployment to pay bills but my last check came June 12, 2010. I’m alone and scared. The city that I live in has the highest unemployment in the State, Illinois. Our children are grown and I sit alone all day searching for jobs. My husband can only call once a month because of the outrageous rates for telephone calls. I’m at the end of my rope and don’t know where to turn if they don’t pass a tier V for unemployment or open up some jobs.
I turned 50 in April and had worked all of my life, starting at age 14 with a work permit! My employer stated to me that they needed someone bilingual and terminated me even after I told them that I would take classes to learn.  I signed up for college and began classes in January then unemployment told me that I wasn’t elgible for unemployment while attending school.”

There are millions of Americans who believe that their lives are over because they can’t get decent jobs.  When you lose your job, your home, your car, your health insurance and then finally your unemployment insurance runs out, it is easy to lose all hope as an Unemployed-Friends user named Ember has done….

“so i feel pretty much hopeless. been unemployed since July 2008. in over two years i haven’t even been called for an interview. tired of looking and applying for jobs outside of my field that require experience i don’t have. it’s all for naught. i have two bachelor of science degrees. my BS degrees, cuz that’s what they’re worth. since losing my job i’ve gotten divorced. lost my house. lost my health insurance. totalled my car and sustained chronic back pain. and moved in with my mom. and did i mention, when all this started i was a new mom, just back from maternity leave? so (now) i’m raising a toddler on my own, with no income. my unemployment insurance ran out a few weeks ago. i don’t even know what to do now. i just want to disappear. i’m tired of trying. i’m tired of being a burden on everyone. if i didn’t have the responsibility to take care of my child i wouldn’t be around anymore.”

This final example is from an Unemployed-Friends user identified as Faith1028.  Be warned that this one will shake you to your core if you have any sensitivity at all.  As you read this, keep in mind that this kind of thing is literally happening to millions of Americans these days…. 

“HI, y’all! This is my story. I’m from Chicago.

I lost my job 11.06.09 – I did my best to remain positive & confident that I would get a job by the end of November.

December 2009 – Still no job. I’m getting food stamps (LINK card) & Unemployment Benefits. Not much money at all, but I’m surviving. Thanks to all this stress, my stomach has been burning and/or been painful daily for all December. I puked my guts out on the 26th.

January 2010 – My stomach is still hurting every day. I had to close out my savings account. I haven’t told my slumlord or my fellow tenants that I lost my job; I go on pretending I’m still going to work everyday. Unfortunately on the 26th, I got my eviction notice. I called the office to ask why. The response was “I don’t know.” I became hysterical. I’ve no job, no money, no family/friends to help. (I have many *relatives*, but no *family*.) I truly believed my only alternative was suicide. I wanted to say good-bye to my brother (my only sibling), but we haven’t spoken to each other for over 4 years; I no longer have his address/phone number. I found him on Facebook. I didn’t bring up my situation because I felt he wouldn’t care. We exchanged a few messages and that was it. I haven’t heard from him since. Good riddance.

February 2010 – Someone found a family that I can stay with for only $250/month! My own room! They turned out to be aquaintances of mine. Vegetarian, too! At least I have a place to stay. I’d rather live alone, but, hey, I’m desperate! — And I’m not too crazy about the bedbugs. OW!

June/July 2010 – Thanks to daily/nightly use of citrine crystals since 30 May, I have no more stomach problems!
Thanks to weekly use of a natural (green!) pesticide from PlusNaturalEnzymes.com, I no longer have a problem with bedbugs! However…
Mid-June, my Unemployment Benefits ran out. Of course, I’m still looking for a job! What am I supposed to do – put a gun to someone’s head and force them to hire me? As of this date, I have $12 left to my name; $0 in my chequeing account. I recently reapplied for and am now receiving food stamps. Before I got my food stamps back, I’ve eaten whatever (Vegetarian!) food I can get, even stuff I’m allergic to. As a result, I’ve become sick: cold-like symptoms, pain in lower intestines…and a rash over my arms, legs, & neck. Oh, does it itch! At least my food allergies are not life-threatening.
Needless to say, my depression has gotten worse.

I am really trying hard to remain positive — and alive.
But why? Is it really all worth it?

I haven’t paid July’s rent, and the people I’m staying with are getting very *impatient*; I fear I’ll be evicted again! The money is coming! It’s not my bloody fault!

Someone on Twitter sent me a link to this site. I know I’m not the only one suffering; some folks have already committed suicide. I don’t want to die, but I don’t want to be homeless, either. I am so bloody scared.
Just give me money that my tax dollars paid for!
–Or better yet: GIVE ME A BLASTED JOB!!”

The really sad thing is that there are countless other stories just like these being posted all over the Internet all the time.

People are hurting.

People are losing hope.

So how did we get here?

Well, it turns out that the “haves” have figured out that they really don’t need the “have nots” after all.  Incredible advances in technology have increasingly enabled employers to replace humans with machines and computers.  In addition, as we have detailed previously, millions upon millions of middle class American jobs are being shipped off to China and to dozens of third world nations where workers are more than happy to work for less than a tenth of what an American worker would make.

All of those jobs that have been lost to technology and that have been sent overseas are not going to come back.  The hordes of long-term unemployed that we are seeing now is just the beginning.  It is going to get a lot worse.

So the next time you hear a hard luck story from an unemployed American, don’t look down on that person.

You might be next.

The Economic Collapse

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The Real Policy Mistake

 

This morning I wanted to puke up my coffee while listening to CNBS, which was going on about “policy mistakes” and the Jackson Hole symposium that is opening today.

In short, the premise they’re running (along with the rest of the media) is that we’re “trying” to have a recovery, and only a policy mistake by the Central Banks can destroy it.

This is a damned lie.

The policy mistake was already made, 10 and 20 years ago, and it was both governments and central banks that made it. 

The policy mistake was to allow leverage to masquerade as growth.

Let me explain.

If I have a dollar of actual production profit that didn’t exist before, I have a dollar of growth.  It’s organic and it’s real.

But if at the same time I produce a dollar of production growth, and then expand the leverage in the system that this dollar is put through from 10x to 30x, it appears that I have three dollars of growth.

That is a lie.  I have only one dollar of actual production growth. 

What I’ve done is abused leverage to falsely state that more growth occurred than in fact took place, trading that fake reported growth for reduced risk tolerance.

That is, if I have 10x leverage in the system and a dollar of growth I need to lose 10% before I am bankrupt – that is, before all of my capital is consumed by the loss.  But if I expand that leverage to 30x then I can only lose 3% before I go under.  I have traded 2/3rds of my safety margin for a false claim of “economic prosperity.”

Central banks are supposed to prevent this from happening, as are banking regulators.  I remind readers that the Federal Reserve Act actually says:

The Board of Governors of the Federal Reserve System and the Federal Open Market Committee shall maintain long run growth of the monetary and credit aggregates commensurate with the economy’s long run potential to increase production, so as to promote effectively the goals of maximum employment, stable prices, and moderate long-term interest rates.

“Moderate” rates are not zero, of course.  Neither are “moderate” rates 2.5%, which is where the 10 year is right now (and headed lower.)  Both of those are severely-depressed rates.

Worse, you can’t fix this with more “QE” or more “stimulus.”  The policy mistake has to be reversed.  Then – and only then – once you have returned to a reasonable level of systemic leverage through the entire economy, does monetary policy become effective once more.

Everyone is looking for a free lunch, both government and private sector.  PIMpCO’s Bill Gross, Geithner, Obama, Bernanke.  None of them want to talk about the fact that the so-called “growth” being boasted about is a damned lie and most of it through the 2000s and a lot of it in the 1990s never happened at all!  That is, we didn’t have actual growth, we had leverage expansion, which works the same way as does “multiple expansion” in the stock market – and is equally-unsustainable.

When you boil it all down our so-called “prosperity” was mostly leverage expansion and the off-shoring of the costs – sure, I can make DVD players real cheap-like if I can belch the smoke from my factory into the air and pollute the hell out of the water.  Not doing that costs money, but so long as it’s not in our back yard, and we don’t see it, we deem it “ok”.  Ditto for slave-labor style working conditions.

Mean-reversion is a bitch, as anyone who has lived through it knows.  It is also inevitable, and just like any pendulum effect, the further you push it before allowing the reversion to take place the worse and more-violent that contrary move is.  Put another way if I pick up a bowling ball and drop it on your foot from 3″ up it’s going to hurt.  If I lift that same bowling ball over my head you’re going to the hospital for what is now a mashed foot.  And if I toss it off a 20-story building and it hits you on the head, we call that “splat“.

The stored “snapback” energy of what we’ve done will be released.  We can choose to try to release it somewhat-slowly, but our policies thus far – a refusal to re-instate Glass-Steagall, a refusal to move down payments for homes back toward 20%, a refusal to put the former 14:1 leverage limits back on banks (which Henry Paulson was responsible for the removal of), a refusal to lock up any of the banksters involved in ripping off consumers along with state and local governments (despite some of those officials, particularly those in Jefferson County Alabama, having been convicted and sentenced) and a refusal to limit federal deficits to some reasonable level (e.g. 3% of GDP, as is the case in the EU) – all are evidence of our refusal to face reality. 

Instead we have chosen to hoist the bowling ball ever-higher, in the (false) belief that it won’t come crashing down on our heads – and that if we can just get it up high enough that we can’t see it any more, the energy it represents – and the damage – will have disappeared.

Economic reality is shockingly similar to physics – you can’t cheat it and you can’t bargain with it. 

You can only choose up to a certain point to accept it, and the earlier you decide to accept reality the less damage you have to endure.

It is time for Bernanke to admit the truth – and his role in creating this mess, along with promoting real, honest, and sustainable measures to bring our economy back into balance.

The Market-Ticker

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