A Working Example
California-based RealtyTrac Inc. reports that 259,085 properties got a default notice last month and that new defaults and job losses may force 1 million homeowners from their properties next year.
“We’re going to see a pretty significant storm next year,” RealtyTrac’s vice president of marketing said. “There are two or three clouds that suggest a pretty heavy downpour.”
Rising unemployment and expiring foreclosure moratoriums will push monthly filings to record levels, he predicted, and as many as 1 million homes will revert to lenders.
“Job loss is a major source of defaults at all times, and job losses are running at extreme levels now,” according to Professor Robert Hall of Stanford, Chairman of the National Bureau of Economic research. “Something like 70 percent of subprime foreclosures are beyond the reach of modification programs,” he says.
“Until we see a turnaround in the job situation, we’re not going to see these numbers improve,” said Jay Brinkman, chief economist for a Washington-based bankers group.
Harm Bandholtz, a U.S. economist at UniCredit Markets and Investment Banking in New York also acknowledges that “The labor market is facing its worst crisis since 1982, and it’s not over yet.”
It took a while, but economists are now beginning to see that rising unemployment is responsible for the downturn in our economy. Job loss is now being recognized, by some, as the fly in the ointment. We may be getting somewhere.
Propping up the failing segments of our economy by granting bailout funding isn’t the way to create jobs, however. That’s just throwing good money down the drain. The short term effect of a bailout strategy is the preservation of a few jobs for a short period of time, but it leads to further hardship for the majority, and putting off the cure only exacerbates the affliction.
The incoming administration’s promise to create 3.5 million jobs in order to upgrade the nation’s “infrastructure” is another way of throwing good money down the drain. We tried that desperate strategy once before – with the Civilian Conservation Corps make-work program in the 30s – and those roads and “bridges to nowhere” built by the CCC got us to – nowhere.
Short-term employment opportunities for small numbers do more harm than good. We need a program that will restart and nurture our economy. We need to create permanent employment opportunities for all Americans. We need to manufacture items that can be sold at a profit, to buyers who can profit from the use of the items we produce, and we need to produce these items without the threat of cost-cutting overseas labor rates. Only exclusivity will afford us this luxury.
And we’ll be guaranteed this exclusivity when we’re building our patented container ships.