Allen L Roland

It's now an Obama Depression...

By refusing to take the necessary steps to bail out Main Street versus Wall Street ~ the Bush Recession has become the Obama Depression and the worst is yet to come as real unemployment accelerates:

I went shopping yesterday with Keiko. We were looking for a fun dress for my granddaughter Sofia ~ who will be celebrating her ninth birthday this weekend. We visited the Corte Madera Shopping Center which features an abundance of high end shops including Macy's, Nordstroms, Gap, Banana Republic Pottery Barn and many other well known names.

The mall was almost deserted and the major stores relatively empty with few sales persons ~ Nordstroms had the feel of a factory outlet. We finally found what we wanted in a small boutique shop which featured quality unique items at a reasonable price with excellent service.

The mall had the feeling of a ghostly town whose best days were definitely long sense past and worst days lay directly ahead ~ a perfect metaphor for Main Street America which has been left behind in Obama's top down bailout of Wall Street and corporate America.

It's an across the board decline in consumer spending ~ Costco Wholesale Corp (COST.O) on Thursday reported a 6 percent fall in June same-store sales, hit by a slide in demand for non-food and discretionary items. This is further retail evidence that the Bush Recession is becoming the Obama Depression.

Martin Weiss, ( alerts@weissinc.com ) summarized yesterday the reasons why we are now in that depression.

" UNEMPLOYMENT IS SURGING AGAIN: In June, the unemployment rate jumped to 9.5 percent, the highest since 1983. For the first time since the Great Depression, a staggering 100 percent of all the jobs created since the previous downturn have been wiped out.

CONSUMER CONFIDENCE IS PLUNGING AGAIN: We just learned that consumer confidence unexpectedly plunged by nearly 10 percent last month. The consumers whose spending accounts for 70 percent of the entire U.S. economy are snapping their wallets shut ~ saving every penny they can for the tougher times they see ahead.

LOAN LOSSES ARE EXPLODING: The American Bankers Association is reporting that loan delinquencies are exploding. In the first three months of 2009, delinquencies on both home equity loans and credit cards exploded to new, all-time record highs ~ and delinquencies on auto loans surged a mind-numbing 48 percent from the end of 2008.

Plus, according to Moody’s, this flood of toxic debt is continuing RIGHT NOW: Charge-offs on bad credit card debt posted their sixth record high in a row ~ and these losses will surge to more than 12 percent by mid-2010! "

But the key indicator for the Obama Depression is rapidly accelerating unemployment.

As Claus Vogt, Money and Markets, points out yesterday ~ "Unemployment, not the Stock Market, Distinguishes a Recession From a Depression: The official U.S. unemployment rate rose from the cycle low of 3.4 percent in 2007 to 9.5 percent as of June 2009. But the Bureau of Labor Statistics computes a second unemployment rate. This broader measure includes all forms of job market slack and is a whopping 16.5 percent. Yes, one in six Americans is unemployed or underemployed right now. That's a horrible number! And it will not go away soon." http://snipurl.com/me39x

But what if I told you that the True unemployment rate is already at 20% !

Not to scare you with this truth, which of course I probably am, but the situation is actually much worse than it seems according to the highly respected John Williams of Shadow Government Statistics http://www.shadowstats.com/ .

SGS is an electronic newsletter service that exposes and analyzes flaws in current U.S. government economic data and reporting, as well as in certain private-sector numbers, and provides an assessment of underlying economic and financial conditions, net of financial-market and political hype.

Williams believes " that the June jobs loss ( 465,000 ) likely exceeded 700,000." David Rosenberg of Gluskin Sheff notes that the fall in the number of hours worked in June (to a record low of 33 per week) is equivalent to a loss of more than 800,000 jobs. Back in the Clinton Administration, the definition of discouraged worker was changed to only include those that had given up looking for work because there were no jobs to be had within the last year. As Money Blogs Top Stocks columnist Anthony Mirhaydari accurately points out ~ By adding these folks back in, William's SGS-Alternate Unemployment Measure rose to a jaw-dropping 20.6%. Separately, the Center for Labor Market Studies in Boston puts U.S. unemployment at 18.2%. Any way you cut the numbers, the situation is very bad. According to David Rosenberg, one-in-three among the unemployed have been looking for a job for more than six months and still can't find one." http://snipurl.com/me3c3

Here's the comparative unemployment rate, year by year, during the great Depression ~ which proves my point.

1929 ~ 3.2% 1930 ~ 8.7% 1931 ~ 15.9% 1932 ~ 23.6% 1933 ~ 24.9% 1934 ~ 21.7% 1935 ~ 20.1% and 1936 ~ 16.9%

It's now an Obama Depression and unless some dramatic bottom up action takes place soon ~ it will definitely be a mid-term election issue in 2010. We may well need a third party that will truly recognize the will of the people versus the will of the banking elite and corporate special interest groups.

Allen L Roland http://blogs.salon.com/0002255/2009/07/09.html

Freelance Online columnist Allen L Roland is available for comments, interviews and speaking engagements ( allen@allenroland.com )

Allen L Roland is a practicing psychotherapist, author and lecturer who also shares a daily political and social commentary on his weblog and website allenroland.com He also guest hosts a monthly national radio show TRUTHTALK on www.conscioustalk.net

-###-

Allen Roland’s weblog: http://blogs.salon.com/0002255/
Website: www.allenroland.com
ONLY THE TRUTH IS REVOLUTIONARY