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I overheard an interesting conversation the other day between some co-workers who were talking about feeling tired all the time. They were describing physical symptoms of depression, going to bed early and waking up tired anyway. They talked about other people they know who are having the same experience.
If I look around in my own little world of work that extends into several industries, construction, digital media and the non-profit sector, it isn't too hard to see why people are feeling a little worn out.
Construction is hitting rock bottom, at least it is in our part of the industry. For the past several months, developers have continued to finish up homes that were part of funded developments from the pre-bust era. Those homes are almost all finished now and probably not selling very fast so few new ones are being built. The end result is that our company that just 8 months ago had a weekly payroll of over $22,000 is now settling down into the mid $6000's and still dropping. Our guys are depressed, they want to work and we want them to work, there simply isn't any work. We're marketing like mad men but nothing is working because people are not spending any money.
In digital media, the only thing happening is work coming out of government. Even that has slowed to a crawl but government is still spending money so far. Still, that leaves a shrinking pot of business to draw from. While some businesses have gone under reducing the competition, the remaining competitors are fighting for every contract.
Non-profit organizations are typically built on cash donations that they turn into investment funds and they then give away a percentage of the income from those investments each year. The idea generally is to retain the original cash contributions and build up the endowment. Problem is that many non-profits have taken huge losses in the stock market and therefore have less money to give out. The poor economy also means that many non-profits are choosing to give money to organizations benefitting poor people so the rest of the non-profits have a lower chance of receiving funding this year. It's tightening up all the way around and the non-profits I work with have laid off staff and made program cuts to reflect their decimated investment funds. Add to this that many people who have made individual contributions in the past are not in a position to do as much, or anything at all this year.
As an aside, I have a close friend who works in education. He has been an administrator for many years and he and I worked together during a year when that school district went bankrupt back in the early 90's (It wasn't my fault, OK?). He has never seen a situation like this. His school district must cut an additional 19 million dollars from their budget due to California's deficit at the state level. This means mid July cuts of hundreds of teachers and classified staff. All school districts are facing similar fiscal problems and all that means that a lot more people are going to be unemployed here in California soon where the unemployment rate was reported at 11% in May.
Many people are probably going to run into trouble paying their bills when all these layoffs happen. Credit card bills missed mean rates jump up to the "default rate" and their credit limit will be cut to whatever they currently owe. A monthly bill reflecting an interest rate of 30% is not something they can probably afford. Is it any wonder the banks call that unconscionable interest the "default rate"? It will likely cause many people to be in default. More mortgages will foreclose as people suddenly out of work and without credit find themselves out of money and unable to make ends meet.
I suspect that teachers may be tempted to dip into their retirement accounts for some quick cash causing liquidity problems for the CALSTRS teacher retirement fund. CALSTRS already indicated that they may be coming to the State for a bailout to meet their obligations around the first of next year.
Add to all of this the price of gasoline. I remember back in January that the price of gas was getting reasonable and I could fill my Honda's tank for about 12 bucks. Now the price is approaching $3 a gallon in California and I am paying nearly $23 to fill the same tank. The price of going to work is going up every time we go to the pump.
Is it any wonder that people are feeling tired out? What is the common man to do about all of this unsettling news? Are we all going to simply have to ride this out or is there something to be done about it at the individual level? As I watch shows like Charley Rose where intelligent and informed people discuss the economic issues, I do not hear anyone talking about the micro economics of the situation. All efforts and all focus is at the macro level. Bailout money went to the macro level and while Democrats talk a lot about the failure of trickle-down economics; that appears to be the philosophy that was used to structure the bailout.
I am waiting to see where the trickle begins and if it does. I hear a lot of people talking about that too. I think President Obama should pay heed and try to explain the bailout theory and how it is supposed to work at the micro level. All I see is continued trickle down depression, the upper echelon has been bailed out with cash or in the courts or the courts with bankruptcy leaving the smaller fish who they owe money high, dry and flopping on the beach. I worry about all those small companies who are being left behind in the wake of these big fish bankruptcies. What are small companies to do now with all the bad paper they're left holding except pass it along to their workers and creditors? There is nothing to do except let it trickle down, there's no bailout funds for the small fish.
Down here at the micro level I see people losing sleep, worried about dismal business, falling behind on their debts, laying off employees, worried about keeping the doors open next week. If a depression is as much a state-of-mind as an economic condition, then I'd say it has already trickled down.
Just a simple curmudgeon observing life in the USA. Cranky posts to his blog regularly at http://crankyblog.com.
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