Do attempt to convince me that the economy is not now in recession. Please. I want to have something to laugh about when you brag about all those bargains you picked up on the way down. Will they be worth anything a year from now?
I've been through many recessions in my time, and over the years, I have discovered one sure-fire sign that the economy is in recession: employers carp about having to pay their workers more than they "deserve". "Expensive" labor causes employers to take out their poor management on their employees' incomes, including reducing their hours of work (if workers aren't terminated completely) even though productivity improved. As Nigel Gault, chief U.S. economist at research firm Global Insight, insists, "As long wages stay under control, inflation is not going to be able to get out of control like it did in the 1970s".
No matter how the captains of industry and commerce attempt to spin the facts, workers know that they are being made the fall guys. Those who have jobs are doing all that they can to keep them, and those who were thinking of changing jobs are delaying taking action. There is a significant correlation between workers' impressions of the condition of the job market and the onset of recessions. As people lose jobs and seek work, their neighbors are approached to aid in the search for replacement income, being asked if their own employers are hiring. That condition is more likely to be seen as an accurate assessment of the state of the economy no matter what so-called experts like Ben Bernanke and Henry Paulson say. These jobless facts don't lie.
The search for new employment isn't being helped by the record oil prices. Local LA television news is reporting, as of this writing, gas prices as high as $3.80 a gallon, and the effects of the record wholesale oil prices aren't going to hit the pumps for several weeks yet. Few of those interviewed by the local reporters doubt that $4 gas is on the way.
Without that job, even those with good credit aren't going to be able to continue to pay the mortgage. Those not yet caught up in the record numbers of foreclosures are instead walking away from their homes before they are foreclosed.
Just to show that the trickle-down theory can work only if one inverts the scale — as homeowners lose their homes, the investors who originally funded the mortgages are increasingly in borrowing trouble themselves. This will only lead to more investors distancing themselves from the mortgage market, making home loans as rare as a truthful statement from the Bush administration.