Unemployment and Foreclosures Sandwiching the Economy Would Soon be Over
Most of the people in USA are convinced that the recession has only been a passing show. They think that the country would soon recover from being sandwiched by the twin pincers of foreclosures and unemployment. But reality is far from the truth. The economy is coming apart at the seams and the country is rushing pell-mell into a cauldron of financial trouble.
The government, businesses and the consumers of the country have collectively accumulated the biggest pile of debt in the history not only of America but of the world. This has made it possible for Americans to enjoy stunning standards of loving for the past many decades. But now the bills are coming in and few seem to understand how massive that financial crisis is on which America is sitting.
There are danger signs flashing for all to see.
FDIC is setting up an office in Chicago that will engage about 500 temporary employees and contractors to handle receivership and liquidation of the assets. This is being done in apprehension of a massive surge in collapses of banks in the Midwest.
Recently the Treasury announced that the foreign holding of its securities dropped by $53 billion last December. This is the biggest historical decline in one month. China by itself reduced its holding by $34.2 billion.
Foreclosures from default on mortgages are reaching record numbers. This is accompanied by tumbling house prices. A second wave is expected as ARM loans are poised to reset. Pundits predict that 5 million houses and condos will face foreclosure in the forthcoming years. It would be nothing short of a catastrophe.
Bankruptcy numbers are skyrocketing. In 2009 there were 1.41 filings showing a spike of 32% over the previous year of 2008.
Without jobs Americans will be unable to clear bills and dues. Detroit mayor calculates that here the unemployment rate is 45% to 50%. In some places without connections no jobs are available.
Jobs are badly needed by the country. But increasing unemployment taxes are discouraging businesses from hiring more employees. 35 states would have to dole out more unemployment insurance taxes this year. It makes hiring costlier. So – there are no jobs available.
The pension crisis America is undergoing is without a parallel in its history. The pension funds are grossly under funded. Millions have reached the retirement age and there is none to make up for the gap in funds.
Another monster is the Social Security ready to devastate finances – the entire system might go bankrupt.
The last but not least important danger sign is that the national debt at the moment stands at more than $12 trillion.
