<a href="http://www.nytimes.com/2008/07/19/business/economy/19econ.html">Uncomfortable Answers to Questions on the Economy</a>
<em>"Something has clearly gone wrong with the economy. But how bad are things, really? And how bad might they get before better days return? Even to many economists who recently thought the gloom was overblown, the situation looks grim. The economy is in the midst of a very rough patch. The worst is probably still ahead.
Job losses will probably accelerate through this year and into 2009, and the job market will probably stay weak even longer. Home prices will probably keep falling, shrinking household wealth and eroding spending power.
?The open question is whether we?re in for a bad couple of years, or a bad decade,? said Kenneth S. Rogoff, a former chief economist at the International Monetary Fund, now a professor at Harvard."
"Back when home prices were multiplying, banks poured oceans of borrowed money into real estate loans. Unlike the dot-com companies at the heart of the last speculative investment bubble, the new gold rush was centered on something that seemed unimpeachably solid ? the American home.
But the whole thing worked only as long as housing prices rose. Falling prices landed like a bomb. Homeowners fell behind on their loans and could not qualify for new ones: There was no value left in their house to borrow against. As millions of people defaulted, the banks confronted enormous losses in a bloody period of reckoning."
"More than two years ago, Nouriel Roubini, an economist at the Stern School of Business at New York University, said that the housing bubble would give way to a financial crisis and a recession. He was widely dismissed as an attention-seeking Chicken Little. Now, Mr. Roubini says the worst is yet to come, because the account-squaring has so far been confined mostly to bad mortgages, leaving other areas remaining ? credit cards, auto loans, corporate and municipal debt.
Mr. Roubini says the cost of the financial system?s losses could reach $2 trillion. Even if it?s closer to $1 trillion, he adds, ?we?re not even a third of the way there.?"
"But Goldman Sachs assumes unemployment will reach 6.5 percent by the end of 2009, which translates into several hundred thousand more Americans out of work.
These losses are landing on top of what was, for most Americans, a remarkably weak period of expansion. <strong>From 1992 to 2000</strong> ? as the technology boom catalyzed spending and hiring ? the economy added more than <strong>22 million private sector jobs</strong>. Over the last <strong>eight years, only 5 million new jobs</strong> have been added."
"Average household debt has swelled to 120 percent of annual income, up from 60 percent in 1984, according to the Federal Reserve."
<strong>"Through it all, a lot of ordinary Americans borrowed a lot more money then they could afford to pay back, running up enormous credit card bills and borrowing against the value of their homes. Now comes the day of reckoning."</strong></em>
http://graphics8.nytimes.com/images/2008/07/19/business/aoneFUll.jpg
I have been saying that it is all about jobs since before IHB was ever created. No one listened to me then, and only a few do to this day, but at least the MSM is getting it. In comparing the national jobs picture cited by the NYT: Between 1992-2000 OC created nearly 263k new jobs, and in the last 8 years OC has only created almost 108k new jobs.
