Tens of Millions of Americans Broke or Going Broke!!!!!!
It is amazing...we debate whether unemployment is U3 at 9% or U6 at 16% or closer to respected economist and statistician John Williams from ShadowStats.com's 20%....but after this week and numerous conversations with others.....my guess is when you really peel the skin off the onion.....there are millions upon millions of families in America silently suffering and not counted in the statistics by anyone.
These people would include: Attorneys, Architects, Airline Workers, Builders, Carpenters, Dentists, Plumbers, Electricians, Engineers, Salespeople, Hairdressers, Waiters, Waitresses, Graphic Artists, Financial Workers.....and I could go on and on and on.....
It is incredible the amount of people in America who have seen their wages reduced in the past two years. Can you believe the starting salary for a commuter airline pilot is now under $20K?......My buddy who flies for major international airline has seen his salary cut by about 40% in the last few years....how many of you could sustain your lifestyle on a 40% reduction of income???
Architects and Engineers that I am speaking to are scared to death because after this Fall, they have no work and there is little in the pipeline for construction projects. Attorneys have seen their work loads cut in half or more....
Believe it or not...a close friend of mine who is a top hairstylist has seen his income drop dramatically because his clients can no longer afford to see him or are cutting back on visits. When I querry waiters and waitresses, generally I get a response that tips are down from the past.
The constrution trades...capenters, plumbers, electricians and laborors have seen incomes drop drmatically as well......
once you add it all up, we are likely contemplating tens of millions of Americans who have seen their incomes evaporate over the past few years but NOT COUNTED AS UNEMPLOYED OR UNDEREMPLOYED as they are still working full time.
The problem is many of these people levered up their lifestyles though 2006 when they were earning much higher incomes and expected incomes to keep rising going forward. You can pass whatever judgment you like....regardless of your position......we are dealing with a HUGE segment of our society who are homeowners, parents, taxpayers, and charitable givers engaged in many aspects of our economy.
Due to declining incomes and relatively high leverage, many of these people are going broke at different rates. These are people the Institute of Alstrynomics calls the functionally un/underemployed. From the outside all looks fine, but behind the scenes, they are silently suffering as we Americans are proud people who try to put a good front on despite personal difficulties.
Evidencing this is credit card defaults are now at record levels. Even higher end American Express has exceeded a 10% default rate for the first time in history. Home foreclsoures are at record highs and there is no end in sight for rising defaults as we proceed through the Summer.
As a result of the silent suffering cutting back...it is destroying the incomes of those they used to patronize. The effect is the inverse of a snowball rolling down the hill sometimes called an adverse feedback loop. Alstrynomics forecasted this years ago and called it Concentric Contraction and more recently identified and diagnosed the pandemic called the FU virus.
My guess is that 50% of the American population will be diagnosed with the FU virus in the not too distant future....we could see credit card defaults exceed 15% by the end of the year and foreclosures, short sales, and deeds in lieu grow parabolicly. There are many neigborhoods in across America where homes for sale or vacant homes are more common than occupied homes.... this decaying condition is growing week by week now spreading into more affluent communities.
Based on the evidence observed and conversations had this week....it is clear that the FU virus is now becoming an uncontrollable pandemic. It has spread to a large number of occupations and now infecting government and healthcare.
I have to tell you...it has spread much further than Alstry anticipated and Alstry anticipated a LOT!!!!! It is now clear that we are on the edge of a crisis of historic proportions.....a crisis that will likely impact America much more significantly than the great depression due to a number of factors including pervasive leverage and much higher standard from which we can fall. The social and economic implication are massive.
At this point....things have progressed so far that I am not sure there is much most can do....but CAPs members have the benefit of Alstry and the Institute of Alstrynomics collecting clear and concise data creating a concentrated case for collective change.
A number of others here on CAPs provide excellent insight....but be wary of anyone who tries to tell you things were great in 2006. Things are much worse than they portray.