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October 24, 2008
SouthAmerica: Letâs say that in the next 2 years with the official US government unemployment rate exploding to 10 percent or even higher. With Real estate prices declining another 20 to 30 percent and the number of new foreclosures are going to explode even with the new US government programs that might be underway. A total of 2,203,295 foreclosure filings were reported in 2007, and in 2008 with the real estate crisis snowballing the new high volume of foreclosures are becoming even worse.
In early February of 2008 Moodyâs Economy.com Chief Economist Mark Zandi testified before Congress that 2.0 million homeowners will lose their homes in the next two years.
That was before the financial crisis reached the current levels. In February 2008 many economists still thinking that the US economy was going to avoid a recession, and the unemployment forecasts still estimated at around 6 percent. Since that time the US economy has been in free fall, and the latest economic forecasts call for a very deep recession.
Today under the new economic circumstances it is possible that 4 million homeowners are going to lose their homes in the next two years.
*****
âU.S. Foreclosures Up 71% in Third Quarterâ By Alan Zibel - AP Business Writer
October 23, 2008 - ⦠Nationwide, nearly 766,000 homes received at least one foreclosure-related notice from July through September, up 71 percent from a year earlier, said foreclosure listing service RealtyTrac Inc.
One Million Bank-Owned Properties
By the end of the year, RealtyTrac expects more than a million bank-owned properties to have piled up on the market, representing around a third of all properties for sale in the U.S.
*******
Real U.S. Unemployment Rate 19 Percent
October 14, 2008
SouthAmerica: Let me review one more time why the financial markets should be bullish about the US economy in 2009, in 2010 and even beyond.
1) The unemployment rate should rise in the United States from 6 to 9 or 10 percent and the number of people unemployed should increase from 9.5 million to 14 million people.
2) Real estate prices should continue to fall at least another 20 or 30 percent making the real estate crisis even more critical.
3) Major companies consolidation, and reorganization in the US.
4) Major budget crisis in most states in the USA â cutting new projects, and reduction in jobs at all levels federal, state, and local.
5) Massive losses to be reported from all kinds of companies in the private sector related to financial losses. (derivatives, lost collaterals and so on.)
6) Major belt tightening by US consumer with major impact in GDP.
7) Wave of banking, financial companies, and other types of companies filling for bankruptcy.
8) To get some of its credibility back the 3 major US financial credit rating agencies - Standard & Poor's, Moody's, and Fitch Ratings â after a complete review of the balance sheet of the US government and taking in consideration all the new obligations assumed by the US government during 2008 â they all arrived to the same conclusion and they changed the credit rating of the US government to a more realistic status of:
Toxic Financial Rating of US government = Junk
9) After people from around the world realized the wrecked estate of the US economy then the smart money started dumping their US dollars assets in an effort to out run the herd and the stampede.
10) The US economy is descending into a deep recession and some economists are estimating that the current official US unemployment rate will increase from September 2008 unemployment rate of 6.1 percent, by the end of 2008 we should have at least a 7 percent unemployment rate, and an estimated 9 percent unemployment rate for 2009.
At an official unemployment rate of 9 percent that means the number of unemployed persons will be 14 million people. If the unemployment rate decline even further to an official 10 percent unemployment rate then 15.6 million people would be unemployed.
The US economy is going through a period of complete turmoil, and in the next few months we are going to have massive businesses consolidation, in the auto industry, airline industry, in the US banking and financial system, in the real estate industry, and this major consolidation and reorganizations are also to affect government jobs of all kinds.
Remember there are a lot of problems related to financial losses for all kinds of businesses and financial institutions that are already in the pipeline and will put a lot of people out of business.
During the year of 2007 about 1.3 million illegal immigrants left the United States to return to their countries, in 2008 the pace of illegal immigrants leaving the country is increasing because of the deteriorating economic situation in the United States and the increased enforcement of the law that is a major incentive for illegal immigrants to leave the country. In 2008 probably another 1.5 illegal immigrants are going back to where they came from.
Last week a Congressman from California said during an interview by CNN News that on his district there were 10,000 foreclosed houses from illegal immigrants. You can bet that a large number of these foreclosed houses used to belong to illegal immigrants that decided to return home, and I would not be surprised if many of these people also left behind thousands of US dollars in unpaid credit-card debt.
In 2009 you can bet that this exodus of illegal immigrants is going to continue since the unemployment rate is supposed to explode here in the United States. And we can estimate very conservatively that another 1.5 million illegal immigrants are going to leave the United States.
This reversal trend of illegal immigration is going to have a big impact on the US economy. Instead of having the usual 500,000 new illegal immigrant arrivals into the US economy, we are having an exodus of people leaving the country.
By the end of 2009 just on this are of illegal immigrants the US economy is going to suffer a negative impact of almost 6 million people on its GDP.
11) You should also take in consideration that the real GDP of the United States it is closer to $ 9 trillion dollars after you adjust it for all the garbage that is included on that figure instead of the Fairy Tale figure of $ 14.5 trillion dollars.
Maybe the way to make some money in the US stock market in the near future might be by shorting the stocks, and after all things are considered testing the Dow Jones 6,000 or 7,000 level may not be a bad idea.
*****
I have been writing for years about the real unemployment rate in the United States including in the Elite Trader economics forum as follows:
The real Unemployment rate in the United States
http://www.elitetrader.com/vb/showt...ighlight=the+US+unemployment+rate#post1736415
Years ago I wrote an article published on Brazzil Magazine on October 1, 2003
âHow to Reduce Unemploymentâ by Ricardo C. Amaral
http://www.brazzil.com/component/content/article/20-october-2003/1073.html
I donât know what happened to the rest of that article since the portion that still published on that webpage it is just 1/3 of the original article. I need to find out where the editor of Brazzil magazine published the other part of this article.
Quoting from that article: ââ¦The Easy Fix
To improve the unemployment rate in Brazil overnight, the Brazilian government should adopt the same system of counting the unemployed as the system being used by the United States government today. It is a simple method of counting the unemployed, massaging the figures and various modern techniques, such as: "Lying, Deception, and Misinformation."
*****
October 3, 2008
U.S. Bureau of Labor Statistics
Nonfarm payroll employment declined by 159,000 in September, and the unemployment rate held at 6.1 percent.
The unemployment rate (6.1 percent) was unchanged in September. The number of unemployed persons was little changed at 9.5 million. Over the past 12 months, the number of unemployed persons has increased by 2.2 million and the unemployment rate has risen by 1.4 percentage points.
http://www.bls.gov/news.release/empsit.nr0.htm
*****
October 14, 2008
SouthAmerica: Anyway, I was just doing research on the web to find out the latest information regarding the official unemployment rate in the United States when I came across this research paper prepared by the Center for Economic and Policy Research in Washington D.C. which was published in June 2007 â âIs the âRealâ Unemployment Rate in the United States 15 Percent?
This research paper confirms what I have been writing about the US unemployment rate for years. And we arrived to a similar conclusion about the real unemployment rate in the United States.
We both agree that the real unemployment rate in the United States is around 15 percent and if the unemployment increases even further by another 4 percent which is a real possibility in 2009, then the real unemployment rate in the United States would be approaching the Great Depression level, and by the end of 2009 we should be approaching the 19 percent unemployment rate level then over 30 million people would be official unemployed in the United States.
Just imagine what another 5 million unemployed people, and another 1.5 illegal immigrants leaving the country can do to push real estate prices even lower in the United States in 2009 and making the real estate crisis even more critical than today.
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