coasts. Their questions were this. Will it be a revolution or civil war?

If things keep getting worse I would wager on civil war.

but I fear you are.

And the social effects will be Obama as a 1 term president, blamed for the misstep, and the beginnings of a three-way civil war in the United States by 2012 (as urbanites invade the countryside for food, rural militias defend their farms, and it becomes unsafe for bankers or politicians to leave their east coast enclaves of New York and Washington DC).
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Executive compensation is inversely proportional to morality and ethics.

I don't expect it to be different. Last recession Oregon lost teachers, state police officers, fire departments, and libraries statewide, as well as being lampooned in Doonesbury for losing days.

The only real difference I see is that this makes a bad situation worse- state governments are always the last to fall in the GDP scheme, but fall they do, and this time, we've got massive unemployment to begin with.

I'm not sure about the second spike of foreclosures, but I *am* sure about massive state government layoffs coming for anything *not* affected by federal stimulus money- and it's not very easy to retrain a teacher who is used to sitting behind a desk to shovel asphalt.

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Executive compensation is inversely proportional to morality and ethics.

Duration of unemployment is clearly a lagging indicator. Go to the St. Louis Fred site and type in UEMPMED.

If the recession bottoms now or in the next few months, if past patterns hold, the duration of unemployment will continue to rise, perhaps for another year or two.

Into permaculture- eating the foods that the primitive tribes ate in your area, grown locally. The neat thing about using *that* as the basis for your nutrition, is by simply replacing your lawn with a weed bed of locally edible weeds, you don't need fertilizer or more water than falls naturally from the rain, and you can feed a family on a quarter acre pretty easily.
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Executive compensation is inversely proportional to morality and ethics.

No problem, G.

That's true in all recessions, including a couple of major ones like 1973-74 and 1981-82. So you need to figure out why "it's different this time."

I know a lot of people think there is a huge spike of more foreclosures out there waiting, but I'm not sure the "second wave of resets" hasn't been transformed by refinancings already in place into a 6 inch tsunami.

You and I aren't as far apart as it may seem. The Bailout/Stimulus Fed packages all have failed to address the underlying problem in the American economy, of strapped consumers and an obese financial sector. Until that is addressed, I do not expect the secular bear market - and the economic problems that underlay it - that started in 2000 to end. We are just coming to the bottom of the second in a series of at least 3 stairstep declines that probably won't end for another 5 or even 10 years.

The first stairstep was the dotcom recession of 2001. Consumers never really recovered from that and ran up debt based on the housing ATM (thank you Alan Greenspan). We had an economic recovery -- GDP was positive throughout -- but consumer confidence, correctly, never recovered.

When the housing ATM blew up in 2006, we started the second decline, that went into recession at the end of 2007. The inverted yield curve in the bond market foretold that about a year earlier (and was as usual denied, only to be proven right).

I'm just going by historically accurate leading economic indicators -- yield curve, stock market, money supply growth, ISM manufacturing, a peak in new jobless claims, and a probably bottom in CPI deflation -- in saying that the second stairstep decline appears to be ending.

As to the average duration of unemployment and shrinking labor force, I would need to be convined based on past history that these are leading economic indicators. If anything they are probably lagging indicators, though.

As to the birth/death model, it's been adding probably 100,000+ phantom jobs for a couple of years now. Since my analysis is on the direction and rate of change, a bias which is consistent like the B/D model doesn't significantly have an impact. If the model added 200k phantom jobs in Dec., Jan., Feb., Mar., and Apr., then a 160k decrease is still a 160k decrease.

As I say, it is remarkable just how many leading indicators are suggesting that the bottom of this recession is upon us. It could of course be a false dawn, but the likelihood is, it is real.

We agree emphatically that "We have a structurally deficient economy and nothing has been fixed." For that reason although I expect +GDP growth later this year, it will be anemic and fragile. Should for example the price of Oil go back up over $80/barrel, we could be knocked right back into recession. More generally, should inflation raise it's ugly head again, the Fed will be in a hell of a spot.

And of course, the average American is now significantly worse off in their finances than the average American was a decade ago. Boomers' retirement funds are still impaired, housing prices haven't bottomed, there's still too much consumer debt, Wall Street hasn't been reformed and still has all of the same perverse incentives. So we may be coming up on the upturn in the middle of a "W" shaped recession, where the second part of the recession will be worse than the first.

In the meantime, to the extent a "Depression" refers to unemployment in excess of 10%, I expect us to arrive there shortly even in U3 terms, and to stay there for several years.

I can't say from the data as it exists now what might knock us down stairstep number 3. But I believe it lurks out there in perhaps 12-24 months. Maybe 48 months if we are lucky. That stairstep will take us down even further. That we have racked up several $Trillion in new debt, and given the largesse to Wall Street fatcats only makes it worse. We will have probably run out of maneuvering room.

We may differ in what the next 3-9 months will bring, but ultimately I think we agree on the long term situation.

That's still a lot of jobs, over half a million and the long term unemployed are coming.

Also, does anyone have a real tally of the jobs "created" by the Stimulus.

So far I only know of 22k jobs created....in India.