Ambrose Evans-Pritchard on Unemployment Etc…

December was the worst month for US unemployment since the Great Recession began.

 

The labour force contracted by 661,000. This did not show up in the headline jobless rate because so many Americans dropped out of the system. The broad U6 category of unemployment rose to 17.3pc. That is the one that matters.

 

…The home foreclosure guillotine usually drops a year or so after people lose their job, and exhaust their savings.

 

…Realtytrac says defaults and repossessions have been running at over 300,000 a month since February. One million American families lost their homes in the fourth quarter. Moody's Economy.com expects another 2.4m homes to go this year. Taken together, this looks awfully like Steinbeck's Grapes of Wrath.

 

Judges are finding ways to block evictions. One magistrate in Minnesota halted a case calling the creditor "harsh, repugnant, shocking and repulsive". We are not far from a de facto moratorium in some areas.

 

This is how it ended between 1932 and 1934, when half the US states declared moratoria or "Farm Holidays". Such flexibility inoculated America's democracy against the appeal of Red Unions and Coughlin Fascists.

 

…It takes heroic naivety to think the US housing market has turned the corner...Professor Tim Congdon from International Monetary Research said the Fed is baking deflation into the pie later this year, and perhaps a double-dip recession. Europe is even worse.

 

Ambrose Evans-Pritchard

Telegraph, January 10, 2010