Truth from Robert Reich, “Shall we call it a Depression now?”

Written on December 5, 2008 – 11:15 pm | by Schizo America |

As usual, this guy can see the forest for the trees.

11% of the American workforce needs jobs.

Of those working, many are working part-time which does not qualify them for benefits such as health care/flex-spending accounts/retirement plans.

American family indebtedness is still very high.

Worries about making mortgage payments are now epidemic.

According to Reich: Two things are needed: First, the massive Treasury bailout of the financial industry must be redirected toward Main Street — loans to small businesses, distressed homeowners, and individuals who are still good credit risks. Second, a stimulus package must be enacted right away. It needs to be more than $600 billion — which is 4 percent of the national product. It should be focused on job creation in the United States — infrastructure projects as well as services. Construction jobs are critical but so are elder care, hospital, child care, welfare, and countless other services that are getting clobbered. Service businesses accounted for two-thirds of the job cuts in November, meaning that the weakness in labor markets has shifted from the goods-producing sector of the economy to the far larger services sector.

There is a kicker in the ‘comments’ section:

Linda said… This is getting seriously scary, especially when we consider the following post by Bushman on the “CitiGroup Scores” blog:
Hows the bailout working?
Citibank has refused to talk to me about a one month deferment because I don’t make enough money! I have a 725 credit score and my wife is over 700 also. I payed over 500K for a house that is barely worth 250K, Never been late on a payment. But have decided enough is enough so Citi can have my house. I am walking and converting all my assets into gold before the rest of the country collapses from the weight of the Bailouts to Billionaires.

The banks are taking bailout billions but holding their mortgagees over the usual payment fires. I agree with Reich. The bailout should be shunted past the banks, to the real customers, the payees of these overly aggressive mortgages. I’d cut the house values to what www.zillow.com has, minus an additional 30% off, then force banks to only try to collect that amount. They took the risk on the upside, they should take the risk on the downside.

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