Send a Tweet
Most Popular Choices
Share on Facebook 1 Share on Twitter Share on LinkedIn Share on Reddit Tell A Friend Printer Friendly Page Save As Favorite View Favorites
OpEdNews Op Eds

iDepression 2.0

By       Message Jim Quinn       (Page 1 of 2 pages)     Permalink    (# of views)   No comments

Related Topic(s): ; ; ; ; ; ; ; ; ; , Add Tags
Add to My Group(s)

View Ratings | Rate It Headlined to H2 10/21/10

Author 27628
- Advertisement -
Depression 1.0

iDepression 2.0

As I listen to pundits, politicians and populists expound on the jobs situation in our country day after day, as if they knew what they were talking about, I'm reminded of the Seinfeld episode where George quits his job as a real estate agent. He sits in Jerry's apartment and ponders whether he could become the general manager of the Yankees, a sportscaster, getting paid to watch movies, or a talk show host. After the discussion with Jerry, he realizes that he has absolutely no skills that are transferable to another career. Everyone in America would like to be the General Manager of the Yankees or get paid for watching movies, but that isn't how it works in the real world.

- Advertisement -

A little reality about the job situation in this country is in order. The unemployment rate reported by the Bureau of Labor Statistics and parroted by the mainstream media is currently 9.6%. Once you stop counting people who have given up looking for jobs and "left the workforce", discouraged workers, marginally attached workers and workers forced to work part-time, you magically get a 9.6% rate. Using the method of measuring unemployment used during the Great Depression and reproduced by, the real unemployment rate is a depression-like 22.5%. The peak unemployment rate during the Great Depression was 25%. There is no doubt that we are in the midst of 2nd Great Depression, but where are the bread lines and the lines of unemployed winding around the corner? No need. This is the electronic Great Depression iDepression 2.0. Your 99 weeks of unemployment and food stamps are direct deposited into your bank account so that you don't have to leave the comfort of your McMansion that you haven't made a mortgage payment on in the last 14 months. There were no credit cards in 1933. Without a job or a house, you needed to move to where there might be a job. Hence the mass migration from the Midwest to California ala The Grapes of Wrath. Today, a neighbor in a matching McMansion down the street, with the perfectly manicured lawn, could be unemployed for three years and no one would ever know. They could sustain themselves on unemployment payments, food stamps, and credit cards. Welcome to the iDepression 2.0.

- Advertisement -

Dude, Where's My Job?

Every politician in the U.S. is running for election on a platform of "creating" new good paying jobs for Americans. Only one problem. Politicians don't create jobs. Businesses create jobs. When politicians and the Federal Reserve get involved in the job market, bad things happen. The excessively low interest rates put in place by the Federal Reserve created a housing bubble that led to the "creation" of 1 million new construction jobs between 2002 and 2006. Of course, the bubble burst has led to the loss of 2 million construction jobs since 2007. What the myopic pundits on CNBC don't realize, because they aren't programmed to think, is that the Greenspan Housing Bubble "created" millions of other jobs that had no chance of being sustained. The number of realtors grew from 750,000 in 2000 to 1.3 million in 2006. We needed hundreds of thousands of new mortgage brokers and appraisers to falsify documents and not conduct proper due diligence. Wall Street needed to hire thousands of new MBA shysters to create fraudulent packages of toxic mortgages and the rating agencies needed to hire thousands of Burger King level thinkers to stamp AAA on the packages of toxic mortgages. These were just the direct jobs created by Easy Al. Home Depot, Lowes and a myriad of other home retailers built thousands of stores to service the needs of all these new "homeowners" and hired hundreds of thousands of clerks, installers, and cashiers. Once the delusion really got going, the "equity" from the homes generated jobs at car dealers, restaurants, cosmetic surgery centers, cruise lines, and yacht retailers.

Barry Ritholtz described how the Federal Reserve provoked housing bubble further warped an already unbalanced American job market:

Job creation has taken place across a wide swath of industries much more than just residential construction. Sure, developers, builders, and subcontractors saw job growth explode. But it was far more than that. From real estate agents to mortgage brokers, from designers to contractors, plus the many employees of stores like Home Depot (HD) and Lowes (LOW), the Real Estate industrial complex was responsible for a disproportionate percentage of new job creation. From 2001, to the housing peak in 2005, the total number of Realtors, as a percentage of the Total Labor Force, gained nearly 50%.

- Advertisement -

The reality is that Greenspan, Bernanke, and the rest of the Federal Reserve Governors "created" millions of jobs that were not sustainable. Their policies distorted an already tenuous economic model, dependent upon consumer spending, no savings, and delusions of home wealth. The chart below paints the picture of sorrow. The key points are:

Next Page  1  |  2


- Advertisement -

View Ratings | Rate It

James Quinn is a senior director of strategic planning for a major university. James has held financial positions with a retailer, homebuilder and university in his 22-year career. Those positions included treasurer, controller, and head of (more...)

Share on Google Plus Submit to Twitter Add this Page to Facebook! Share on LinkedIn Pin It! Add this Page to Fark! Submit to Reddit Submit to Stumble Upon Share Author on Social Media   Go To Commenting

The views expressed herein are the sole responsibility of the author and do not necessarily reflect those of this website or its editors.

Writers Guidelines

Contact EditorContact Editor

Most Popular Articles by this Author:     (View All Most Popular Articles by this Author)

Could GE Collapse?

Jesus of Suburbia


An Economic Lesson from Butch Cassidy and the Sundance Kid

Founding Fathers of our New Country

The Great Consumer Crash of 2009