US Economy Going South?

Note: The following post will depress you, unless your sense of humor is based on schadenfreude.

I've been maintaining my belief that we're going to see a pretty bad recession for over a year now. Until very recently, the newspapers were all cheerleadering the economy and how everything was just peachy. Even Ben Stein and other economists said everything's great last November.

CNN Money has started a new featured series called American Money, where everyday Americans recount the financial hardships they're facing in the current economic environment.

Nearly all of them focus on how the real estate meltdown has adversely affected them. A few of them bought a new home thinking that their old home would sell off fast. Unfortunately it didn't and they got burnt (and almost divorced) trying to manage two mortgages. One young man got a subprime loan that resets in a few years, and quite a number of people lost their jobs or found jobs that paid a lot less than what they were used to.

One family has a daughter who's ready for college but they've blown through their savings and can no longer afford to put her through college. Another mom has used up all her savings, 401k and even her kids college education 529 plan in her efforts to stay afloat.

One 62 year old had been in the mortgage business for 20 years has been reduced to working as a store clerk and part-time surfing instructor to get by. He's even managed to ruin his credit by co-signing a home loan for his son, who's in a similar situation. He's also managed to run up $35,000 in debt. I doubt he'll be able to pay it off on his minimum wage jobs and he seems to think the same way. He's decided he's going to just walk away from all his debts.

There are currently nearly a dozen stories of financial hardship with people using their credit cards, and maybe even payday loans just to pay the rent and put food on the table. I read it and really felt quite depressed. There was also a family that felt spending $250 a month on gas for the commute was breaking their budget.

In fact an underlying theme I caught here and there was that gas prices were too high and aggravating their misfortunes. If you don't have an extra $150 a month and its breaking your budget, that's really sad. You really need to cut back on all your expenses and/or move to a cheaper place.

Hopefully, the government will channel some of the $3 billion/week its spending on Iraq towards creating real employment in the US.