That's right. I estimate that the Pension System would collapse at roughly a Dow 6,000, which is only 5 days of 400 point declines from here.
Of course the Market won't decline 400 points each day for the next 5 days... how about 200 points per day for the next 10... or 100 points per day for the next month...
Of course, the Federal Reserve would simply print money, monetize all our debts and buy the S & P. Think about how that would go over for US$ holders and savers...
If you think a political crisis is out of the question you are really are not thinking this through:
With 5% unemployment the U.S. had 10% of its population receiving food assistance from the government. Now think 10%, 12%, even 15% unemployment. That would mean 25% to 35% of the population needing food assistance with a similar percentage being in default on the mortgage on the family home. Now think about the populations of East L.A., East St. Louis, East New York, Detroit, Oakland, Philadelphia... these cities are barely holding it together as it is... if you think things are ferkakta now, just you wait.
I know it is hard for folks living in Scarsdale (NY), or Greenwich (CT), or Boca Raton (FL) to actually conceive that there were millions of people that were BARELY getting by BEFORE the economy took a sh*t, but now these folks are not getting by at all.
Every political leader from President BHO on down is going to tell you "its going to take time"... and they are right, but not about what they are trying to convince you of. It is going to take time until the Oil shoe drops, and when it does it is a light's out issue - LITERALLY.
But at least South Carolina law man Leon Lott wants to lock up that dangerous pot smoker, Michael Phelps... spending tens, and perhaps hundreds of thousands of $$$ to prosecute Phelps.
So we got that going for us...
Mentatt (at) yahoo (d0t) com
7 comments:
I think you are making an error in calculating the number of people who need food assistance. It is not linear with the increase in unemployment.
A lot of people getting laid off are near retirement age. So they'll just retire early. Some of them are even lucky enough to go back and consult the same firms they got laid off from!
A lot of other people getting laid off are getting a year or two of severance pay.
Some other people getting laid off find a new job right away. Or they take the 16 weeks of unemployment and the 16 week extension, and then start working again. Plenty of comfortable six figure households "take" the unemployment insurance to stay underemployed for a while and sit by the pool.
Not everyone is as lucky as the people above. But not every layoff results in foreclosure, hardship, and food assistance. It's the exception, not the rule.
Of course it could get worse, but I think you'd need a MASSIVE dislocation first. Like if you couldn't exchange money for things. Or if the government couldn't make payments.
Perhaps rather than spending money punishing a gold medal athelete for smoking a natural, therapeutic plant, they should legalise it, thus creating loads of jobs around the new industry, and everyone will become a lot more relaxed and caring about each other at the same time.
Peace.
gregoryw,
I think you are somewhat correct as well. However, there are definitely areas of this country tilting on depression ( by the # at least ) take Wilmington, Ohio, with 30% of pop. lost their jobs fromDHL, GM is still slashing and it appears that those people had a chance to cash out and now that offer is gone. Elkhart , Ind. has 15 % uneploy. up from 4.5 a year ago. These are just examples and there are many of those unemployed who's jobs came with little or no benefits ( blue collar). So this thing is hiting it so many ways that just about any scenario is unfolding. Yet the big one has not made it here, YET!
Robert
Of course it is not linear. I was merely guesstimating!
I will stick with my best guess... today 30 million, by 2012 60 to 75 million on food assistance.
If I am wrong, you can say you told me so...
Food assistance is rarely granted to single fellows like you guys. Food assitance goes to families with young children. I speak from experience when I say that feeding a family of 5 costs more than the $$ received for unemployment insurance (yes, I know we could make some adjustments and eat cheaper, but you get the idea...).
A family with ZERO savings with the bread winner on unemployment will ABOSOLUTELY POSSITIVELY need food assistance.
Anyway, these kinds of projections are at least half art and the balance math. We will debate this in 24 months, but I would be willing to bet a month's groceries to benefit a family in need that my guess is pretty close.
Please let me know what your best guess is.
In regards to Phelps...
'Make the most of the (Indian) hemp seed and sow it everywhere.' -George Washington
I'm still waiting for this country to wake up and remember it's past. Hemp farming was a tremendous cash crop. You could pay your taxes with it! It's time to stop being afraid of it's female counter-part.
I wish Phelps hadn't been so apologetic. I suppose it was more for his sponsors than anything else but still, if he even had a clue about this plants suppressed past it might have been different. He'd have 200 sheriffs coming after him...
Anyhow, thanks for all your posts Greg. I come here daily and always enjoy your point of view.
thanks for the information....
___________________
Sharon
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