You already know my views that I do not expect jobs to grow in any significant numbers between now and 2016/2017 at the earliest.
By significant I mean that I do not expect the U-3 unemployment level to drop below 8%, or the U-6 rate to drop below 14%. For this to occur would require that jobs grow at the rate of 225,000 per month for almost three years.
I also believe that salaries and wages will remain largely stagnant or decrease for most Americans.
This is neither good nor bad at the macro level. It is an economic correction that is bringing us into alignment with our competitiveness costs with the rest of the world. It will be a continuing process for the next 20-30 years. Once you hear people complaining about ‘cheap Ethiopian/Bolivian/Russian’ quality goods, instead of ‘cheap Chinese goods’, then you will know that we have exploited the last remaining cheap labor pools.
At the micro or personal level, this economic correction is certainly most ungood.
This correction is undermining the basis for much of our society’s general wealth, stability, and sense of well being and general welfare.
People have a right to be angry and to want a solution. Getting cheap products in return for losing their jobs is not a deal. It is the hand that has been dealt to them — and many, many Americans eagerly accept the deal in their purchasing habits — but it is a deal that is destabilizing our country.
Since economic gravity or inertia currently has a unique hold on the ability of Americans to find or to create jobs then we should seek to assure some level of stability as our economy evolves.
Core to that is making sure that Americans do not lose their homes due to losing their jobs and not being able to replace their jobs, or to replace their income at levels sufficient to maintaining ownership of their homes.
As a free market believer — true free markets not the rigged marketplace that pushes risk on people and seeks to protect corporations and banks — then we need a solution for both assuring stability of our fellow citizens and a solution that asks the free market to be a responsive market that does not undermine our society.
Important Terms: U-3 and U-6 are the two major categories by which the unemployed are counted by the Bureau of Labor Statistics (BLS.gov). Category U-3 are the short-term unemployed and they are generally eligible for unemployment benefits. Category U-6 are those that have been unemployed so long that they are no longer considered part of the work force; they are generally known as the ninety-niners because they have often exceeded their eligibility to collect unemployment benefits.
My proposal is that all future mortgages which are ensured by the federal government include the following clauses:
>>If 8% Unemployed: When U-3 unemployment reaches 8% for six months in a row, or within any six month period within 12 months, within a metropolitan statistical area (MSA) then mortgage rates on existing mortgages will be dropped to two percent plus prime rate if that rate is lower than the current mortgage rate. Any lost interest will not be recouped from the borrower at some later date. The loaning financial institution will write off any lost interest on the loan as a loss. This rate will remain in effect for up to six months past the date when U-3 unemployment drops below 8%.
>> If 10% Unemployed: When U-3 unemployment reaches 10% for six months in a row, or within any six month period within 12 months, within a metropolitan statistical area (MSA) then the mortgage rate for those unemployed more than 90 days will be dropped to 0%.The loaning financial institution will write off any lost interest on the loan as a loss. This rate will remain in effect for up to six months past the date when U-3 unemployment drops below 8%.
What say ye?