The real problem is, technological innovation has created a problem - we don't need as many workers as we used to. Offshoring has created another problem - industry now has access to workers who will gladly accept less money than they would need to buy the products they make, sell or support. Before the dawn of unions, at least those poor saps were here. Now that they are oversees, full employment is unlikely.

"In an overleveraged economy, job losses can be expected to be followed by further delinquencies and mortgage foreclosures."

Exactly. I've been unemployed since March and due to the extremely small amount of unemployment benefits I am allowed (covers rent and groceries only, and then, just barely) I'm not able to pay the full minimum amount on my credit card. They've been calling relentlessly, but you can't get blood out of a stone.

But what can they expect? When people lose their jobs, it's all about survival at that point. I just feel sorry for those who have mortgages they cannot meet due to unemployment. That's the real tragedy.

I see signs of economic improvement in my area (new restaurants and businesses are starting to open, construction is returning after months of stalled building) but the economy is still very volatile. There are no jobs out there, and the competition for the ones that do exist are enormous. Not to mention the stock market- it took a giant hit on Monday that erased two weeks worth of extremely slow growth. We're not out of the woods yet, but I sincerely hope things start turning around. I don't know how much longer I, and many others, can take this.

Absent some type of structural change in the economy the jobs are gone. I do not see anything coming in the next few months/couple of years that will create a signifigant amount of new jobs. And nothing is coming that will raise WAGES in line with inflation or the wealth created through the massive increases in worker productivity.

We are trapped in a system that does not reward work. Wages have been stagnant or declining for over a decade. Only by over leveraging their homes and relying on credit cards has the middle class been able to maintain the illusion of prosperity. That door is closing.

Whatever improvements happen the economy will not spread down to the middle class. The stock market may go up. Good for the investment class, but it does nothing to help pay my monthly bills (which keep getting bigger). Corporate profits will go up. Good for executive bonuses, but that won't translate to hiring or bigger paycheck.

I heard from a colleague earlier this week that over twenty scientists from a pharmaceutical company in Penn. have moved to India to work for one of the Indian generic pharmas. These people were all U.S. citizens who felt their prospects for the future were better in India than Pennsylvania!

On the West Coast, the FT reported that Chinese companies are starting to buy high technology SV, R&D-based companies, so that they can capture the new technology. Based on experience so far, it is probably not a "stretch" to assume that the technoloy will be commercialized in China but not necessarily in the U.S.

This is certainly not a traditional business cycle. When the dust finally settles, we may not recognize what we see.

Greetings

Pretty simple to figure:

The only jobs left out there: Counter at Mickey D's and Greeter at Wally World, the rest got sent to China and India et al. The 2/3 of the economy that is consumer spending has been supported by smoke and mirrors of credit card debt and home equity loans.

There are no jobs, none that equal any semblance of a middle class existance at least not until the cost of shipping that big red container exceeed that value of its contents but that is the NEXT crisis...

The work force is larger than anyone thinks it is, and the number of workers eligible for benefits has shrunk. When the housing bubble first started to crater, the pollyannas swore it wasn't happening, because the employment numbers didn't support the slowdown. The number of illegal and green card workers in construction aren't counted. Then people move down the career ladder, and they aren't counted either. The jobs demographic now includes a number of workers who don't work for a living wage, family members, roomates, etc. Marginal workers compete with primary wage earners. To go back to the fruit pickers in California, in the prequel to this, we see many of the same things, and family dislocation, divorce, etc.

The damage to the social fabric of this country will be in most ways the most serious outcome, and in middle class terms the result is children who do not have it as good as their parents, who will never be able to earn and save money, and face a future in which their status as parents is greatly diminished.

Debt is the real issue here. What has happened is not merely the end of a short business cycle in a recession, but a banking collapse, a housing price collapse, a financial model collapse, and consequently, a debt collapse.

As prior writers have pointed out, without higher wages (even though workers are more productive) and without more decent jobs based in the United States, workers cannot replace the amount of living off credit that has been going on. Essentially, credit replaced decent wages or jobs for 30 years or more. The Obama plan is to renew credit, but you can't when there is too much debt in every sector - the population, the corporations and the government. To revitalize the union movement or revitalize the manufacturing economy takes years, and still might not work.

So there will be no revival in spending in an ordinary sense for a long time. Statistically, if this 'recession' goes over 2 years - which it is approaching; and results in REAL unemployment of 15%, (we are just under 10% in 'official' unemployment, but the real figure is more like 13-14%) and production drops down 15-20% (we are at about 12% now) then we should christen this a depression. Some countries, like Latvia and Mexico, are already in depressions. The world auto industry is in a depression.

Will government spending blunt the depth of this? Yes, of course ... the real question is 'how much?' Right now, it has had almost no effect except to give the markets some optimism.