A Wake Up Call And The Case For Action

Every business day 27,270 Americans become unemployed (Footnote 1). Unemployment will continue to increase for five years, peaking at 39 to 43 million, 25-28 percent of the total American civilian work force(2) under or unemployed. Every day, 4,983 go bankrupt and this too will keep doubling(3). American State pension funds have lost over $850 billion (4) and more than 5 million Americans are projected to lose their homes(5) as 8 percent of all mortgages are delinquent and housing prices continue to decline 36 percent before hitting bottom(2). With 2.2 million foreclosures and $6.5 trillion in American net worth already lost in the real estate decline, it will peak at $9 trillion based on historical averages(5).  As of January 2009, $25 trillion in global assets disappeared and this too will increase6. Nations around the world are rapidly erecting trade barriers resulting in a reverse globalization(7) that will accelerate the global decline. The U.S. Government has utilized $2 trillion in bail out or emergency funding and it will need another $8 or $9 trillion(2).  If this happens, the American national debt will then rise to $65–70 trillion, resulting in every person owing Uncle Sam $220,000 to $230,000(2,8). We cannot allow this to happen for if it does, every family of four would have to pay Uncle Sam $18,000 a year for fifty years, assuming a zero percent interest rate, in the form of higher personal or corporate taxes. Meanwhile, economists are worried about another $1 trillion in Alt –A and $1.1 trillion in prime mortgages defaults(9) and the cascading effect felt from defaulting commercial loans and hundreds of corporate bankruptcies. Around the world, the life-blood of emerging markets, direct foreign investments, has declined 82 percent in 12 months impacting half the world’s population(10). The average decline of GDP in major Asian nations has reached depression levels(11) and the most significant point of all these statistics is that we are only at the end of the beginning. America and the world, have reached a turning point. What has been set in motion cannot be undone without radical and fundamental changes to every aspect of life and living.

Footnotes:

1.    Labor Department, Houston Chronicle January 2009, Wall Street Journal February 7-8 Weekend Edition
2.    Wall Street Journal, February 3, 2009: What Other Financial Crises Tell Us
3.    New York Times, November 16, 2009: Downturn Drags More Consumers Into Bankruptcy
4.    January 13 Bloomberg: State Pensions’ $865 Billion Loss Affects New Workers
5.    New York Times, February 4, 2009: Both Parties Move to Aid Homeowners
6.    Bloomberg January 30, 2009: Davos Delegates in ‘Denial’ as $25 Trillion of Wealth Vanishes
7.    Wall Street Journal, February 3, 2009: Nations Rush to Establish New Barriers to Trade
8.    Peter G Peterson Foundation
9.    Economist, February 5, 2009: Move Over, Subprime
10.  Economist, February 5, 2009: Homeward Bound
11.  Economist, January 29, 2009: Troubled Tigers